What Is An Earnest Money Deposit?

Happy Wednesday! When buyers are buying a home, they are usually very nervous about their Earnest Deposit. We are here to help you understand what the Earnest Deposit is and why you need it. When buying a home the Earnest Deposit is generally required for the buyer to secure the house. An Earnest Deposit shows the seller that you are a well qualified buyer and are not going to back out of the contract at the last minute. Here are the top questions and answers regarding an Earnest Deposit.

1. How Much Money Do I Need For My Earnest Deposit?
Typically, the buyers Earnest Deposit equals at least 1% of the purchase price. So if the Purchase Price is $200,000 then the Earnest Deposit should be $2,000. More than 1% is definitely better, the more money that you put up shows the seller how serious of a buyer you are.
2. How Do I Ensure I Don’t Lose My Deposit?
It is possible for a buyer to lose their Earnest Deposit, although we make sure to take the necessary steps to avoid the loss of your Earnest Deposit. In Arizona, there are a few ways to get out of the contract without losing your Earnest Deposit. The first would be the inspection period. If within the inspection period, the buyer does not accept the property, the Earnest Deposit will be returned and the contract will be cancelled. The second is if the property does not appraise for at least the purchase price. The third is that the buyer must be able to secure financing, if not the Earnest Deposit will be returned.
3. Why Should I Not Be Worried?
If you are a serious buyer and are ready to purchase a home there is nothing to worry about. A seller needs to know that you are serious about buying their home. If the property has too much work that needs to be done or if it does not appraise for at least the purchase price, be sure to get out the contract in the time allotted per the contract. If you follow the correct steps, you have nothing to worry about.

Thank you for stopping by our blog this week! Be sure to check back every Wednesday for a new blog update. If you are interested in buying or selling real estate, give us a call at 602-354-5404!