Importance Of Earnest Money Deposit In A Real Estate Purchase
As you are on your way to purchasing your next home, be sure to prep with the Earnest Money Deposit. This deposit is a good faith gesture that you are committed to purchasing the property and is typically put up before any contingencies are met. It is also called Escrow Money or EMD. And just like your first house – it’s not cheap! Average earnest money deposits run $3,000-5,000. Remember that earnest money deposits may be refundable depending on the terms of the purchase contract. One of the terms can be a home inspection in Maryland with a contingency contract.
What is an earnest money deposit?
I’m the seller. I have a property that you might be interested in. One of the things we require of our Buyers is a $500 Earnest Money Deposit (EMD). The EMD is sort of like a security deposit. It’s a Buyer’s show of good faith that they have an earnest desire and expectation of being able to complete the purchase. You, as the buyer, offer an EMD in exchange for the seller taking time out of their schedule to show you this property and take it off the list. If you decide not to continue with this purchase, you will get your deposit back within 5-7 business days (depending on what day you put your deposit down).
Who Holds The Earnest Money Deposit?
The escrow agent usually holds the EMD. Unless the contract says otherwise, the EMD must be deposited immediately after your agreement is accepted. The Escrow Agent is not a party to the contract. The escrow agent is not responsible for the property but will retain all money and documents related to the sale until closing. The Escrow Agent is not a party to the contract and has no rights to any of the money in your escrow account. They are merely holding your funds for safekeeping until they are needed at the closing. If you cancel the contract on contingency and have not used all of your Earnest Money Deposit, the money will remain in that account and be refunded to you when you cancel the contract. If there is an issue with your home inspection, then it’s possible to cancel the contract on contingency and get a full refund of your deposit.
What’s an Earnest Money Deposit In Maryland?
The earnest money deposit is put in a non-interest account of a third party and not the seller’s history. This way, if the sale falls through, both parties are protected.
Suppose you still need to find a title company. Some real estate brokerages in Maryland will not hold these monies and will require a wire transfer before closing. In that case, most home sale transactions in Maryland require the buyer to choose whether the title company or the buyer’s agent’s brokerage deposits the earnest money, so keep that in mind when making your decision.
How much is earnest money regular in a real estate transaction?
The earnest money deposit is normally 1 – 3% of the purchase price and is deposited in an escrow account until the completion of the deal and the buyer has settled on their loan. The exact earnest money deposit amount depends on what’s customary in your market. If everything goes without a hitch, the earnest money deposit is applied to the buyer’s down payment or closing costs.
Can a buyer lose the EOD?
Do you know that every real estate contract is different? There are so many terms and conditions that have to be met in order for the contract to be valid. If buyers default on their end of the bargain, they will lose their earnest money. But this will only happen if they fail to do what they’ve agreed to do in the contract. Likewise, if the seller cannot sell the property at the agreed-upon price and time frame, or if a Home Inspection in Maryland has a contingency contract and fails an inspection, he will be responsible for returning the buyer’s earnest money to them.
A buyer’s agent ensures a contract is upheld and earnest money stays safe.
A Buyer’s Agent is an expert in real estate transactions who will be your advocate and guide throughout buying a property. They have access to the resources to help you find the perfect home for you and your family. You might not know this, but when buying a property in Maryland, it is required by law that you hire a Buyer’s Agent. Many people don’t know there is no charge for hiring an agent! The only cost associated with hiring an agent is the commission they receive from the seller once a sale has been closed. Are you looking for a Maryland Home Inspector to ensure you buy a safe property? We are a team of professionals who know the residential real estate market inside out. Our home inspectors are experienced and knowledgeable and always have your best interests at heart. Get in touch with us to learn more about our services!
