What home buyers in Fort Lauderdale Florida need to know about earnest money

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It is important to make your offer stand out in today’s highly competitive market. Earnest money is one way to achieve this. Earnest money, also known as a good-faith deposit, is money that a seller deposits to prove her seriousness in buying the property. The concept of earnest money is simple but can become complicated when it’s applied to real life. This is what homebuyers in Fort Lauderdale Florida should know about earnest cash.

What Is Earnest Money?

Before laying down your money, it is important to identify the earnest money for a home buyer in Fort Lauderdale Florida.

It’s basically money that is put before closing to show that a buyer is serious and protect the seller in case a deal falls through. When a buyer and seller agree to a purchase, the seller pulls the house off the market. The next step is closing the deal.

The seller must relist the home and start over if a bargain cannot be reached. Huge financial losses could result from this. The earnest money safeguards the buyer in case he backs out. Typically, it is 1-3% of the buying price. The contract is maintained in an escrow account after it is finished. According to the market, Earnest money may be used to reduce the buyer’s down payment or closing costs if all goes according to plan.

Sellers also benefit from earnest money because they are less likely to make multiple offers on the same home and then walk away when the seller takes it off the market. You can reach a local agent Sellers: 954-281-7487
Buyers: 954-247-4285 to learn more about earnest money in the Fort Lauderdale Florida marketplace.

How Much Earnest Money?

The question then becomes: How much earnest cash should you set aside? Although the exact answer will depend on the market, we can give you some guidelines, especially if cash offers and bidding wars are common.

“The average good faith deposit in most real estate markets is between 1% to 3% of the property’s purchase price. For highly competitive properties with many interested buyers, it can go as high as 10%. Some sellers will set fixed amounts to help filter out potential buyers who aren’t serious.

Talking to an experienced agent is the best way to establish a reasonable earnest income amount. A professional agent will assess the property and the market and give a range. Although it is unlikely that you will lose your deposit in good faith, be prepared to offer a price the seller will appreciate and not expose yourself to financial risk.

The earnest money is usually paid to an escrow account or another third party that holds the funds. This account holds the money until closing. Usually, the money is applied to the buyer’s down payment or closing costs.

Refunds and Losses

If the deal fails, home buyers in Fort Lauderdale Florida do not always lose their earnest cash. Buyers can sometimes get their deposit back, especially if it is covered under contingencies, such as a purchase contract.

  • When a home inspection uncovers severe housing defects
  • If the appraised amount is less than the home’s sale price, the seller will not negotiate the sale price.
  • When the homebuyer cannot secure financing
  • A buyer cannot sell their existing home before closing on the new one.

This means that you must pay attention to and fully understand every clause in your contract. These two conditions can lead to you losing your earnest money.

  1. You can waive the contingencies. You can waive inspection and financing contingencies. They protect your earnest cash in the event that your mortgage is denied or the house is damaged beyond repair. If you waive one of these contingencies, your good faith deposit will be forfeited if the house is not sold.

  2. It is easy to ignore contract timelines. Home purchase contracts are often time-bound and must be completed by the buyer within the agreed timeline. You may be charged a penalty for failing to close the transaction by the deadline. Your good faith deposit may be forfeited.

Protecting Your Earnest Money

It is important to take steps to protect your earnest cash deposit from fraud and unjustifiable forfeiture. These measures include:

  • Get everything in writing. Make sure you have written documentation. Any amendments that you make to the details, such as buyer responsibilities or timelines, should be included.
  • Use an escrow account to hold the funds. Avoid trust issues by not transferring earnest money directly from the broker or real estate agent. The manager should be a trusted third-party such as an escrow firm, legal firm, or title company. You should ensure that the funds are in an Escrow Account and get a receipt.
  • Understanding the contingencies. You must ensure that the contract contains all contingencies that will protect your interests. You should not sign a home-purchase agreement without the protections you need.
  • Respect all buyer obligations. Real estate purchase agreements often have deadlines that protect sellers. To avoid violating the contract, answer all questions promptly and provide any documents requested.

Also Use an Experienced Fort Lauderdale Florida Agent

A home purchase is a major investment. Your earnest money deposit could be a significant amount. To protect your earnest cash in the event of a problem, you should work with an experienced Fort Lauderdale Florida agent. Contact us at Sellers: 954-281-7487
Buyers: 954-247-4285 if you are a home buyer who wants to protect your earnest cash. We at Florida Rent To Own Homes Specialize in Rent-to-own Homes. Contact us today to speak to one of our agents to find out how you can own your dream home.

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