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An earnest payment or earnest money is a specific form of security deposit made in some major transactions such as real estate dealings or required by some official procurement processes to demonstrate that the applicant is serious and willing to demonstrate an earnest of good faith about wanting to complete the transaction. [1]
Although money is the most common consideration, it is not a required element to have a valid real estate contract. An earnest money deposit from the buyer(s) customarily accompanies an offer to buy real estate and the deposit is held by a third party, like a title company, attorney or sometimes the seller. The amount, a small fraction of the ...
Earnest money is a "good faith" deposit the homebuyer provides with an offer, to show the seller an intent to follow through on a home purchase. The funds are typically held in an escrow account ...
Upon acceptance of the sales contract, the buyer opens an escrow. An escrow commonly includes a signed agreement between the two parties plus an earnest money payment check which accompanies the offer, [15] and which is generally not deposited until all parties are in agreement. The escrow deposited then leads the seller to more property ...
The number of days and the amount of the option fee, like sales price and earnest money, are among those features negotiated between a seller and potential buyer in the sale contract; in Texas, option fees typically range from $100 to $200, while earnest money ranges from one to several thousand dollars.
This is known as a "purchase and sale" contract, which may have conditions. U.S. residential purchase contracts typically contain an inspection clause, a short period during which the buyer can inspect the property and back out of the contract with the full return of the earnest money, if the property does not pass the buyer's inspections.
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