What is earnest money? When a buyer attempts to buy a home they should, but are not required to,  give some sort of earnest money. This suggests to the seller that the buyer is serious about buying the home. It’s more or less a good faith jesture. Once my buyer’s write an offer I then have them write a check to the escrow agent. That agent is usually the listing or selling real estate company. I then make a copy of that check to submit with the offer. Once the contract gets ratified we then have 48 hours to deposit that check into an escrow account. There is not an industry standard for the amount of earnest monies required. I generally suggest 1% but have seen much less or more. When a seller accepts a contract they will pull that home off the market. That means they are risking valuable marketing time in hopes that you are a serious buyer. If there is not any earnest monies then the buyer has much less risk.

What if I do not buy the home? If you are a buyer and have proper contingencies in place then you should receive your earnest monies back. A seller can choose not to sign a release and in South Carolina we cannot release monies until this is taken care of. If your a seller, then unless the buyer is in a clear breach of contract I always suggest signing a release. In most cases the buyer receives their monies back and you lose the marketing time that the home was marked as contingent in your local MLS.

The Fred Holland Team hopes this blog gives you a little insight into earnest monies. Remember that each market is different and to always consult your local expert. If you have any questions for us, please email josh@fredhollandrealty.com or call (843) 343-1307.