If you’ve never been through the home-buying process, some of the terminology can seem a bit foreign to you. One of the many phrases you might come across is earnest money.
When making an offer on a condo or home, it is often encouraged to include earnest money with that offer. Earnest money is anywhere from 1-5% of the offer price that is intended to show the seller you are really interested in their property. The amount isn’t set in stone and it usually depends on the market. So how is earnest money used for?
When you make it to closing, that earnest money will be used towards any closing costs, down payments, or other items you would typically pay out of pocket.
There are a few situations where your earnest money will be refunded if you cancel during your contingencies stated in your Purchase Agreement. This usually requires a stipulation or clause to be added to your offer, and those can vary. Financing not going through, the seller not being able to close, and an unacceptable home inspection are all reasons that if you are protected in your contract, you should receive your earnest money back. If you do decide to back out of the contract with no real reason other than changing your mind, the seller may be able to keep it.
If you’re looking to buy a new home in Minneapolis, Saint Paul, or the surrounding areas, please feel free to call, text, or email Shannon at your earliest convenience.
Shannon Lindstrom, Realtor®, AHWD, CRS, GREEN, MRP, VCA