Not everyone has the funds to pay for properties in full. Earnest money is different from a down payment and often a lot less. It’s basically a good-faith gesture. It shows both parties are serious about the transaction.
Are you thinking of investing in your first ever home or piece of land? There’s a lot that goes into such a big decision. With finances at stake, it’s important that you educate yourself about the rules, regulations and processes you’ll be dealing with on your path towards ownership. So, consider the following three benefits commonly associated with using earnest money as you ponder the possibilities.
- More money to invest
Earnest money requires less money than down payments. For hot markets like San Francisco earnest money amounts of over $100,000 are common. Earnest money allows more money to be invested in other areas such as rehab costs or business expenses.
- Builds relationship with Title Company and Private Money Lender
Earnest money is more than just money. It shows a professional relationship between buyer and seller. Investors with a track record of owning a few properties have an easier time securing private money lending than new investors.
- Insurance against Unforeseen events
In event the deal falls through because of something that has happened with the seller. Anything that stops the deal from going through the money goes back to the buyer. Also, if the home inspection shows too many appliances are in need of repair. The buyer can drop out and get their earnest money back.
Bio : Brian Yarde is a SEO Specialist at Pride Home Warranty. Pride Home Warranty is a nationwide home warranty provider for home systems and appliances.You can learn more about home warranties and how they help homeowners at www.pridehomewarranty.com.
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