If you’re serious about making an offer on a home, you’ll need to put down an “earnest money” deposit (sometimes referred to as an escrow deposit).
But what is earnest money, and could you lose it if you’re purchasing a home?
What is Earnest Money?
Earnest money is the money you put down—not your down payment, which is something entirely different—to show a seller that you’re serious about purchasing his or her home.
The amount of earnest money you put down varies; your Realtor® will tell you what’s appropriate for the Grand Junction market and what’s best for you to put down on the home you’re ready to buy. For some people, it’s a few thousand dollars; sometimes it’s up to 3 percent of the home’s purchase price.
The deposit is basically a good-faith gesture you make toward the seller. Once you’ve handed over earnest money, you can’t touch it without written consent from both parties (you and the seller). When you close on the home, the earnest money deposit you made is usually applied to the balance of your down payment.
In some cases, though, you can’t get your earnest money deposit back if you change your mind on the home—but here’s how you can protect yourself.
Have Your Realtor Include a Contingency for Inspections (and Other Issues)
Your Realtor is looking out for your best interests, so he or she will likely do this anyway—but you need to ensure that your Realtor includes a contingency that hinges on a successful home inspection.
Get Everything in Writing
Make sure you have written notice that your loan has been approved and that the home didn’t appraise for less than the purchase price before you hand over an earnest money deposit.
Review the Property Disclosures
Sellers have to tell you what’s going on with a property before you buy it, including property defects, neighborhood nuisances, or anything else that could negatively affect the property (and your decision to buy it).
Your Realtor will guide you through the entire process and make sure you have the proper protections in place… but it never hurts to know more about the homebuying process than you need to!
Are You Buying a Home in Grand Junction?
If you’re thinking about buying a home in Grand Junction, Fruita or any of the surrounding communities, we’d love to help you.
Call us at 970-765-4135 or get in touch with us online to tell us what you want from your next house. We’ll help you find it.
In the meantime, feel free to browse our:
- Grand Junction real estate listings
- Fruita real estate listings
- Palisade real estate listings
- Redlands real estate listings
- Clifton real estate listings
- Glade Park real estate listings
- Loma real estate listings
- Whitewater real estate listings