ABOUT THE EARNEST MONEY DEPOSIT - What
Earnest Money is and when it's paid.
What is Earnest Money, often referred to as Escrow?
When a home buyer enters into a Contract of Sale, they deposit with the "Escrow Agent" a sum of money held as "Good Faith" that the home buyer will follow the requirements of the Contract of Sale faithfully and settle as
required by the Contract.
Earnest Money deposits vary in Maryland home purchases. Approximate amounts for Earnest Money deposits are:
Purchase Price of $250,000, the Earnest Money deposit would be approximately $2,500.
Purchase Price of $500,000, the Earnest Money deposit would be approximately $5,000.
One Percent of the purchase price is a reasonable offer for a Earnest Money deposit and is usually acceptable for most home sellers.
The Earnest Money deposit is deposited and held in the Homefinders.com Escrow Account until settlement, at which time it is credited to the buyer's cost of settlement. If the settlement costs to the home buyers are less than the Earnest Money held, the excess will be paid to the title company to refund to the home buyer.
In case of default of the home buyer, the contract provides for remedies to the seller to pursue forfeiture of the Earnest Money by the buyer. In the event that the contract is voided because of an unsatisfactory home inspection, the Earnest Money is refunded to the home buyers.
Earnest Money is required by most contracts in Maryland and few sellers are interested in taking their home off market without some "Good Faith" money deposited by the buyer.
If you have any questions about this matter, contact Homefinders.com for a fuller explanation.
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