Earnest Money for Summit County Colorado Real Estate
By The Walsh Group
In the competitive Summit County resort real-estate market, when a buyer really wants a choice piece of resort Summit County real estate, he is best off submitting a sizeable amount of earnest money along with his offer.
What is “earnest money” It is the down payment a buyer makes when offering to purchase a property, whether it’s Summit County CO real estate or any other property.
The earnest money is typically payable to the listing brokerage firm or a closing agent, such as a title company. The money isn’t actually deposited until all parties come to terms and sign the purchase contract. At that point, the money is deposited and held in an escrow/trust account until closing. The funds must be good funds from the start, unless the buyer and seller agree otherwise.
While there are no specific “rules” stating how much earnest money is enough, the amount is dictated somewhat by the price of the property. A typical seller wants the earnest money to fall somewhere between 2% and 5% of the offer price. A typical buyer wants to offer as little earnest money as possible.
After all contingency dates in the purchase contract have passed, the earnest money becomes “hard”, which means the buyer could forfeit the earnest money should he/she not go through with the closing. This is important to a seller because once a property goes under contract it usually goes “off the market” and other potential buyers go by the wayside.
Therefore, once the earnest money is “hard”, most sellers can breathe a sigh of relief in knowing their property will close (sell). It’s obvious that most sellers have a vested interest in fulfilling the purchase contract. Unfortunately not all buyers feel the same. There are buyers who will terminate a purchase contract on the day of closing. They are willing to lose $500 or $1,000 in order to move on to another property, etc. However, they are much less willing to lose $5,000, $10,000 or $20,000.
So what’s a buyer to do? If you want to be a stronger buyer and you want sellers to take your purchase offer seriously, write a bigger check! That’s right. Offer more earnest money than expected. The best buyers are those who are motivated and financially capable of buying a property. Sellers are more willing to enter into serious negotiations with, and respond more favorably to, a buyer who presents a strong earnest money deposit with the offer. If you’re not serious about your offer why should a seller take you seriously’
Whether you’re buying or selling, you need an experienced real estate broker’someone who understands the complexities of a real estate transaction and someone who is looking out for you! The knowledgeable buyer’s agents and listing specialists in The Walsh Group will be happy to help you with all of your real estate needs.
Articles © Copyright 2006 by The Walsh Group