October 15, by khproperties 2 Comments. This check, along with your check for the option period , are submitted with your offer to begin the process of buying a home. The earnest money check is made payable to the title company that will be closing the transaction, while the option money check is made out directly to the seller.

Earnest money is also known by some other names in other locations: Simply stated, earnest money is money put up by the buyer showing evidence of their seriousness earnestness to proceed with the offer and contract. However, there really are no rules and a seller could request additional earnest money or a buyer could offer less and the contract would be perfectly acceptable. Each offer and negotiation is different, so there are many factors that could play in to determining an amount.

There is an option built-in to a standard TREC contract that would allow a buyer to deposit some earnest money up front and then additional earnest money at a later date as determined by the contract. This is particularly useful if the contract is extended out over several months or if there is a contingency factor such as the buyer waiting on funds from an inheritance. Adding additional earnest money could be a way for a buyer to show continued seriousness to proceed with a contract or for the seller to feel more secure that a buyer is willing to continue to put money into the deal.

Once a contract is executed by all parties, the title company will sign in order to receipt the contract and the earnest money. They will deposit the earnest money check into an escrow account so yes, prepare for it to be cashed where it sits through closing. If everything goes as planned, the earnest money will show up as a credit to the buyer at closing and generally will simply reduce the amount of cash a buyer needs to bring to closing as if they pre-paid a portion up front — this is why in some places it is known as a good faith deposit, as the buyer is depositing money into the escrow account up front in good faith that they will be purchasing the property.

If the contract does not make it to closing, the earnest money is at risk. If a buyer terminates the contract during the option period or for reasons clearly permitted by the terms of the contract, the buyer should be able to receive the earnest money back.

A written authorization signed by both buyer and seller has to be sent to the title company requesting the release of funds to the buyer.

Earnest Money: What Is It and Why Do You Need It?

Title companies cannot legally release funds without the permission of all parties. If the buyer defaults on the contract however, the funds should be released to the seller. Determination of what constitutes a true default should be made under the advice of legal counsel and other remedies may be available to a seller above and beyond just those funds.

However, even in the case of a buyer default, written authorization by all parties to the title company to release funds is still required. If the seller defaults again, you should consult with an attorney to determine default and remedies , the buyer may be entitled to a release of the earnest money funds back to them. Once again, written authorization of all parties is needed by the title company. Paragraph 15 of the Residential Resale Contract outlines the definition of default and remedies available to all parties.

If you have two otherwise seemingly equal offers, but the second one has a higher earnest money amount, a seller could be more likely to pick this second offer. Reasons could include that the buyer is showing a willingness to invest more in the deal from the beginning. It also shows that the buyer may have access to more funds and may therefore be a stronger loan candidate.

This is not always the case, but these factors could play a role in a negotiation. As you can see, earnest money is rather important in the grand scheme of real estate. Without it, buyers would have little reason to stick with a contract and could terminate anytime they wanted without any real penalty.

By putting some money in up front, the seller is secure in knowing that the buyer is unlikely to terminate because they have something to lose their earnest money. Buying a Home Tagged With: October 13, at 5: If buying a mobile home and lot. Th seller does not have home advertised.

Glossary

I believe the mortgage company us a private type lender. Due to purchase price is only 13, And buyer credit score low. October 16, at 9: Like many things in the contract, it is negotiable. For info about closing cost assistance, you may want to speak with your lender and agent as programs and availability vary by region as well as type of purchase. In addition, the buyer may qualify for some specific assistance based on many different factors income, job, etc.

Your email address will not be published. Kimberly Howell Properties is proud of our agents and this year, we're excited to announce our Platinum Top 50 Early Qualifiers - Sonia Flores, Paul Garcia, and Kimberly Howell.

Each year, Platinum Top 50 … [Read More Join Kimberly Howell Properties and McNair Custom Homes as well as agents and builders from all across San Antonio for the Spring Tour of Homes. Billed as the "Biggest Open House in Central Texas" the yearly … [Read More Sean O'Donnell is the go to source for home loans and advice on anything mortgage related.

Working with IberiaBank, Sean has delivered time and time again for the agents of Kimberly Howell Properties and their … [Read More On Friday, March 3, , Kimberly Howell Properties celebrated their awesome Realtors with their annual Awards Banquet.

Every year, the agents gather to celebrate their successes and each other in one of the … [Read More McNair Custom Homes invites you to join them for an open house weekend at several of their fantastic homes throughout San Antonio. On March 4th and 5th, these wonderful properties will be open for you to tour … [Read More San Antonio real estate and property information provided by Kimberly Howell Properties.

Kimberly Howell Properties does not assume any liability or responsibility for the operation or content of any of the linked resources, nor for any of the interpretations, comments, graphics, or opinions contained therein. All information deemed reliable, but not guaranteed. Kimberly Howell Properties San Antonio Real Estate.

Blog About Us Agents Buyers Neighborhoods Relocation Information Sellers Listings Available Rentals Homes for Sale Contact. Rental Search Homes for Rent.

Home Values Free Home Valuation. Property Search Homes for Sale. What Is It and Why Do You Need It? What is Earnest Money? How Much Earnest Money Should You Offer? What Happens to the Earnest Money? Can the Amount of Earnest Money Make an Offer Stronger?

A Closer Look at Buying a Home Part I Residential Contract: A Closer Look at Buying a Home Part III Non-Realty Items Addendum: Comments Tdawn says October 13, at 5: Leave a Reply Cancel reply Your email address will not be published. Wordpress Hashcash needs javascript to work, but your browser has javascript disabled.

Your comment will be queued in Akismet! Congratulations to our Platinum Top 50 Early Qualifiers Kimberly Howell Properties is proud of our agents and this year, we're excited to announce our Platinum Top 50 Early Qualifiers - Sonia Flores, Paul Garcia, and Kimberly Howell.

Real Estate Topics Buying a Home Homeowner Tips KHP News Local Events Local Laws Miscellaneous Mortgages and Financing Open Houses Real Estate Real Estate Market Renters and Landlords San Antonio Places Sell Your Home Technology.

Our real estate agents can help you with properties anywhere in Texas. If you need assistance finding agents in other parts of the country, please contact us.