Real Estate terminology
Hi,
We hope you are having a great weekend. We have a new word for the day.
Earnest Money Deposit - Down payment made by a purchaser as evidence of good faith.
This one is simple, but many people confuse it with loan down payment. As the definition states, earnest money is a deposit used to show good faith on a contract. When an offer is submitted for purchase, a check for earnest money should be attached, showing that you are "earnest" in your ability to perform on the contract. This money is usually 1-2% of the purchase price but often is only $1000-3000 even on homes where that would be less than 1%. The earnest money is applied to the total down payment at closing such as 5% down loan terms, or in the case of 100% financing it is usually applied to closing costs. If the buyer defaults on the terms of the contract, the earnest money may be kept by the seller.
If you have any questions concerning real estate, please feel free to contact us.
Adam Tarr,ePro
Sharon Kotula, ABR
Your Phoenix / Scottsdale Area Real Estate Source
RE/MAX EXcalibur
480-483-3333
info@WeAreAZRealEstate.com