Columbia, South Carolina real estate is our specialty! Serving the Columbia, SC area, including Lake Murray, Cayce, Chapin, Irmo, Lexington, West Columbia
and more!
Earnest Money
Earnest Money is an Amount of money deposited to insure and persuade a Seller that the Buyer is “in earnest” about the desire to buy his/her property. If, before closing, the Buyer were to default on the Offer to Purchase, then the Seller will get the Earnest Money. Our Earth Available Realty Offer to Purchase is written in such a way as to protect our Buyer Clients’ Earnest Money to the greatest extent possible. However, if you write an Offer to Purchase and then default on the Offer without extenuating circumstances, chances are you may lose your earnest money.
The amount of money required as earnest money depends on many variables that change with each property. A good ballpark figure is to expect to put at least 1% of the Price you are offering into Earnest Money, but the actual amount could turn out to be much different.
Sometimes a larger amount of earnest money is used as part of the Negotiating Strategy. In general, as Exclusive Buyers’ Agents, we try to put at risk the smallest amount possible, unless there is a good reason to use more.
When you first write an Offer to Purchase we will get a check from you for the amount of Earnest Money called for in the Offer to Purchase. This check is not deposited anywhere at all until we get a completed Contract negotiated between you and the Seller. Once we reach that point, however, we are required by law to deposit the check within 24 hours. It will be deposited into a special checking account all real estate companies are required to have, known as our Escrow Account. The money sits in that account and cannot be used for any purpose until after closing or until you default. Thank goodness Buyers’ defaulting rarely happens! (The SC real estate License Law requires that even though the disbursing of earnest money is covered in the Contract of Sale, if the deal falls through, the real estate company holding the money can not release the funds until both the Buyer and the Seller sign a separate release document.)
At closing, on the HUD-1 statement, you will be given credit for the Earnest Money and it will be used as the first part of your down payment, or to pay some of your closing expenses if you are borrowing 100% of the purchase price. In rare cases, on 100% VA loans, when the Seller is paying the Buyers’ Closing Costs, the Buyer actually walks out of the Closing with a check refunding all or part of their Earnest Money, but don’t count on that happening.
