When you make a purchase offer on a Northwestern Wisconsin home, you have the option to include earnest money in your terms. Let’s talk about what earnest money is, and how it helps your offer stand out!
Earnest money is a voluntary “good faith” deposit. This up-front money shows the seller that you are serious about the purchase. It doesn’t cost you anything extra to make this gesture, because earnest money is basically treated like a down payment at closing.
Earnest money deposits are around 1% of the purchase price in our market. The amounts can be higher or lower depending on market conditions and the value of the home. Whether or not to include earnest money, and what amount, is up to the buyer.
There is an important catch! If you, as the buyer, fail to close for any reason that is not covered by your contingencies, the seller may ask to keep the earnest money as compensation.
Fortunately, that rarely happens. If your purchase offer is written with buyer contingencies for financing approval, home inspection, etc., and you cannot complete the purchase due to one of these reasons, your earnest money is oftentimes refundable.
When earnest money is included, the amount is written in the Residential Offer to Purchase. Earnest money is paid within 1 to 7 days of the seller’s acceptance of the offer. The funds are held by the designated title company or brokerage until the closing.
Sellers like earnest money because it shows a buyer’s confidence in the transaction. It also shows that a buyer is financially prepared. And, buyers with earnest money seldom get cold feet! This is why offers with earnest money stand taller than offers without.
Have home buying questions? We can help! Six Lakes Realty is a locally-owned family business with over 45 years of experience. Contact us today for friendly, hometown service!
John Flor
Managing Broker
Six Lakes Realty
Office: (715) 924-4806
Email: john@sixlakesrealty.com