What it is and why it’s good to include it as part of your real estate transaction.
Earnest money is specifically used to show that a buyer is serious about purchasing a property in regards to real estate transactions. Earnest money is paid by the buyer to the seller and shows a level of commitment and integrity towards the purchase and it is used as a down payment if and when the buyer goes through with the offer. If the buyer does not go through with the offer, then the earnest money is left to the owner and not returned to the buyer. Earnest money is vital to how real estate actions are perceived by buyers as well as sellers because they demand a certain level of seriousness in regards to purchasing the property to the seller. Many buyers can be interested in a property, but unless earnest money is exchanged by the buyer to the seller, a serious transaction cannot take place. Earnest money wins the appreciation from the seller to the buyer and instills that the property is practically in the buyers hands and earnest money gives the buyer first priority on a property sale. The reality is still that unless the property has been fully sold, it is still the property of the owner, but earnest money can give a buyer the reality that the property is close to being theirs. Earnest money is a great tool used in real estate transactions and can convince a seller to go with one buyer over another. If a buyer utilizes the earnest money tool, then they are giving top priority for the property, even if all the paperwork has yet to be signed. Earnest money is similar to a promise from the buyer that they will be purchasing the property. It is a good idea for sellers to instill earnest money into their real estate transactions because then they have much less of a threat of getting short-changed by a buyer who says one thing and then does the opposite. Earnest money gives a verbal promise a level of backing that works to benefit the entire real estate transaction.