This seems to be one topic that can be confusing when buying a home. Don’t feel alone if you have this same question.
This seems to be one topic that can be confusing when buying a home. Don’t feel alone if you have this same question. You may wonder why do I need to make a deposit & where does it go? It’s important to know what this is and why you need to make a deposit when you aresigning that offer!
Earnest Money
A deposit can also be called an “earnest money deposit”. This deposit shows the seller that you are a serious buyer. You want to assure the seller that you are in fact a serious buyer, as the seller is going to take the risk of taking this property off of the market.
They don’t want to lose time and money by taking it off of the market and missing out on serious buyers. If you have nothing invested in buying their home then you could walk away at any moment – leaving them half packed and moving across the country with no options.
Built-in Protections
Even though you are putting up a deposit there are assurances for you, the buyer, as well. You can make stipulations in the offer such as, should you not get the financing needed to purchase this home you would then be refunded the deposit. Our local contract is very balanced and protects the buyer and the seller as you make your way to closing.
It counts toward your Total
It’s important to keep in mind that a deposit is not an extra cost associated with buying a home. This will be credited towards your closing costs or down payment at closing.
You will not be making this check out to your agent or the seller. You will make the check payable to a third party – the escrow or closing agent, and they hold on to it.