Real Estate Q&A: What is Earnest Money?

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Real Estate Agent with Cherry Creek Properties, LLC

Real Estate Q&A: What is Earnest Money?Real Estate Q&A

 

The seller asks the buyer for Earnest Money to demonstrate a serious intent to purchase the property.  Earnest Money is typically 1% of the purchase price, however in homes priced over $500,000 Earnest Money could be as much as 2-3% of the purchase price.

Earnest Money compensates the seller if the buyer is in default of the contract, or if the buyer walks away from the purchase of the property.

As long as the buyer acts in good faith and works within the deadlines of the contract, the earnest money is protected and can be returned to the buyer if the deal cannot move forward.  The Earnest Money will also be treated as a credit to the buyers’ down payment or closing costs upon purchase of the property.

The Contract to Buy and Sell Real Estate (in Colorado) specifies how the Earnest Money will be treated as part of the Real Estate transaction.


If you have Real Estate Questions, The Foerster Team has the Answers.  Please call us at (720) 530-5554, email us at Donna@TheFoersterTeam.com or leave your question in the comments below.  Who knows? Your question might be the topic of a future blog post!


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Donna Foerster

The Foerster Team

Rocky Mountain Real Estate Advisors

www.TheFoersterTeam.com

720-530-5554 (cell)

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Re-Bloggged 5 times:

Re-Blogged By Re-Blogged At
  1. Richie Alan Naggar Author PEARLS SERIES of books 05/22/2012 07:55 AM
  2. Gene perez 05/22/2012 09:34 AM
  3. Rebecca Gaujot, Realtor® 05/22/2012 03:02 PM
  4. Stephanie Arnett 05/23/2012 12:22 PM
  5. Gene Riemenschneider 05/24/2012 10:19 AM
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Topic:
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Comments 47 New Comment

Rainmaker
782,847
Donna Foerster
Metro Denver Real Estate Agent
Cherry Creek Properties, LLC

Hello Joyce~ I'm having fun posting some FAQs.  I feel strongly that it's our responsiblity to educate consumers.

Gene~ Particularly with First Time Home Buyers!

DeeDee~ Seems to be a common question for most of us.

Mike~ Once again I'm surprised by how "local" real estate truly is.  10% is a lot for our neck of the woods!

Bob~ We also need to remind ourselves and consumers that the "rules" vary by state and sometimes even within the state!

Thank you Adrian.  I enjoyed writing it too!

Of course Steph!  Thank you!

May 23, 2012 09:02 PM
Rainmaker
568,777
Phil Leng
Phil Leng Team - Residential Real Estate Experts &
Keller Williams Eastside Market Center

Hi Donna,

Good post.

Earnest money is important. On my listings, I will encourage the seller to counter a low earnest money, even if everything else is OK.

Phil

May 24, 2012 05:35 AM
Rainmaker
782,847
Donna Foerster
Metro Denver Real Estate Agent
Cherry Creek Properties, LLC

Hello Phil~ Good strategy.

May 24, 2012 10:00 AM
Anonymous #46
Anonymous
Tonya Kinchelow

THIS WAS AN AWESOME POST!! not just for Buyers and Sellers but for new Realtors in the business.

keep 'em coming

 

June 04, 2012 02:38 PM
Rainmaker
782,847
Donna Foerster
Metro Denver Real Estate Agent
Cherry Creek Properties, LLC

Hi Tonya~ So glad you found it helpful!

June 04, 2012 02:57 PM
Rainmaker
782,847

Donna Foerster

Metro Denver Real Estate Agent
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