Earnest money shows you’re serious!

Typically when an offer to purchase a house is made, you, as the buyer, will also pay an “earnest money” deposit.  This deposit shows the seller that you’re serious about the offer to purchase the property.  This is also know as "Good Faith" or "Escrow deposit."

The amount of earnest money deposit varies based on the type of property being purchased and local market conditions.  As your real estate professional, I’ll help you determine the appropriate amount to pay as an earnest money deposit.

The sales contract will dictate who holds the earnest money.  Usually the seller’s real estate agent will deposit the earnest money in a trust or escrow account until closing.   Many times, the Title Company will hold the deposit.  At closing, the earnest money is applied to the purchase price as a credit back to the buyer.

In the event the sale doesn’t close, the sales agreement generally spells out the conditions under which the earnest money will be disbursed.  Generally if the seller meets all the terms of the contract, the seller will keep the earnest money.  If the seller does not meet the terms of the contract, the buyer may receive a total or partial refund of the earnest money. 

Think of earnest money as "Preagreed Liquidated Damages" where both buyer and seller have agreed that this money is the penalty of default for the buyer, compensating the seller for time off market, incurred costs, etc.

In Florida, deposits of this kind are safer when held by a brokerage who falls within FREC (Florida Real Estate Commission) Guidelines.  If buyer and seller disagree, an escrow dispute order will be submitted to FREC without burdening the court system in a needless litigation.  FREC will investigate the conditions of the dispute and issue a disbursement order to the rightful party. 

My brokerage, Total Realty here in DeLand with our administrative office in Orange City is the largest broker in this area.  To remain on top of my game, I attend meetings, classes and seminars to stay abreast of contract issues and policies as they affect our industry.  Knowledge is power!  Don't trust your investment in real estate to an unknowledgeable agent.

Contact me anytime about earnest money deposits or other topics you are not sure of.  I will be happy to help in any way I can.