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| Earnest
Money |
In
order for the seller to know you are serious about the
offer, you will need to include a deposit or good faith
money (a.k.a. Earnest Money) with the purchasing contract
or offer. The amount varies but 5-10% is usual. Who holds
the deposit and the amount of the deposit should be specified
in the contract. Typically the money goes into an escrow
account, which earns no interest. The earnest money is
often then used as part of the cash down payment given
to the seller. The earnest may be returned to the buyer
in the event the seller pulls out of the deal. If the
buyer pulls out of the deal and a disagreement occurs
over who gets the earnest money, the broker has two options:
- Hold the money until the disagreement is settled;
- In some states, turn over the money to the state
real estate commission or agency for mediation or
to the local courts for litigation.
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