Boston luxury condos for sale: What is an Earnest money deposit

If you are currently in the market for a Boston high rise condo, you may have heard about something called an earnest money deposit. Especially if you are a first-time buyer, it’s possible you have no idea what this type of deposit entails. Let me give you a brief explanation.

What is earnest money deposit

An earnest money deposit marks the beginning of the financial phase of the property buying process. A potential Boston high rise condo buyer gives the real estate agent a check to be deposited into an escrow account when the seller accepts the offer. The Offer check is usually $1,000 followed up couple weeks later with Purchase and Sales check that can range from 3 – 20 percent of the accepted selling price of the Boston luxury condo, minus the $1,000 offer check.

What is the purpose for earnest money deposit?

The purpose of the earnest money is to convince the seller that the buyer is sincerely interested in purchasing the Boston condo. Without putting this money down, a buyer could potentially have offers accepted on various homes with no restrictions and then back out of sales, to the dismay of many sellers.

Are there benefits of putting more money down?

There are a few benefits to offering more earnest money to a seller. More money offered signifies a buyer is completely ready to purchase the property and close the deal quickly. If the deal goes through smoothly, the earnest money goes toward the down payment and closing costs on the home. Earnest money is not an additional payment of any kind. If the earnest money totals more than the closing costs and the down payment combined, the buyer receives the difference at the closing.

Are there drawbacks on offering substantial earnest money down?

There are also some drawbacks to offering substantial earnest money. If a property sale does not work out due to a bad inspection, inadequate financing, or another roadblock, the buyer may not get the entire earnest money amount back. There are usually small cancellation fees that come out of the deposit. Additionally, most purchase contracts state that if the sale does not go through, the earnest money will stay with the seller due to loss of time for taking their property off the market.

There are many other tricks and tips you can use to ensure you’ll soon be a proud owner of one of the many attractive Boston high rise condos in downtown Boston. Get in touch with Ford Realty Inc., today at 617-720-5454 and we can help you find the downtown Boston condo.