What is earnest money? - YouTube

Today I am answering the question what is earnest money, and we are starting

right now. Hey everyone, welcome back to my channel. I'm Karin Carr, a real estate

agent with Keller Williams in Savannah Georgia. If you're interested in all

things real estate be sure to hit that subscribe button right there because you

know, I talk about some good stuff every week and if you're not a

subscriber how are you gonna know? So what is earnest money? When you are

buying a house you're going to put down a good faith deposit. This is what earnest

money is. So let's say you're under contract buy a house for $150,000.

You'll put down your earnest money as a deposit to take

the house off of the market and move forward with selling it to you. Let's

say that you're buying a house for $200,000 you're going to put up some

money as a good-faith deposit in order for the seller to take it off the market

and work with you. This is money that is refundable to you if you cancel during

your due diligence period. If you don't know what due diligence is I did a video

about that. You can link right up here and watch that later. But first you're

going to do all of your inspections. You're going to do a home inspection,

maybe a termite inspectionm you can practice driving to work every morning

from the house, you can check out the neighborhood, you can see what the HOA

fees are, and basically inspect that house to your heart's content during

your due diligence period. If you find anything that's a deal-breaker for you

and you end up cancelling you can get your earnest money back. But if you

remove your contingencies, you've done the appraisal, you've done your

inspections, you've gotten the green light from your lender, you're moving

full steam ahead, and then you cancel the seller is entitled to keep your earnest

money. This is what the seller would keep as damages if you are ever in

breach of contract, so the more money you put

down as earnest money it shows that you're a more serious buyer. But you also

stand to lose more should you ever be in breach of contract. Now if you are

working with a real estate agent who is representing you (I would never let my

buyers be in breach of contract) I would make sure that they knew... we're moving

forward with the purchase. We've gotten the green light from the lender, the

property appraised for the sales price, you've done all of your inspections,

you're happy, you know that if we go forward at this point and then you

cancel you would be losing that earnest money. Are you 100% certain that you're

ready to move forward? So hopefully you're working with an

agent that is going to be guiding you and letting you know of those timeframes

so that we never put that earnest money in jeopardy. The last thing we ever want

to do is have you lose your earnest money. There are typically three

contingencies when you're buying a house and they are listed right here - the

inspection contingency meaning we are happy with the condition of the house

and what we're getting, the financing contingency - your lender said that yes,

they will give you the loan. And the appraisal contingency where the property

has appraised for what you've offered to pay for it, if not higher. If you cancel

during your due diligence period - you did your home inspection and you were not happy

with what you found, you are entitled to get your earnest money back. If you

cancel prior to having your loan approval let's say the interest rates

went up sky-high you suddenly can't afford the monthly payment any more or

the lender denies you the loan maybe something happened you lost your job

you're not able to buy the house anymore you're able to cancel prior to the

expiration of the financing contingency and be entitled to your earnest money

back* (see description box below). If the property does not appraise for the purchase price in certain

circumstances you are entitled to get your earnest money back. But if you do

all of those things and three days before closing when everybody's all set

to close you say, "Oops, another house came on the market down the street and

we like that one better," you're probably gonna lose your earnest money. So

those are some things to be aware of. Now when you go to the closing table your

earnest money is applied toward your closing costs so

it's not in addition to the closing costs, it is part of it. If your lender said

your closing costs are going to cost $6000, you've already put down

$1000 then the cash to bring to the table would only be $5000

instead. When does earnest money get deposited? Your earnest money, whether

you write a check or you do a wire transfer, will probably get deposited the

first week that you are under contract. So make sure you have money in your

account and the check doesn't bounce. So now you know what earnest money is. If

this is your first time buying a house click this link right up here. I did a

video series on how to buy your first house ever and we walk through the

entire process step by step. If you like this video be sure to hit

the thumbs up button, leave me a comment and consider subscribing to my channel. I

post new videos every Monday and I'd love to have you join the community.

Thanks so much and we'll see you next week!

BLOOPER REEL: Did you hear my stomach just growl? Because you were out of contract - that's

my five year-old's phone that he plays video games on. Oh, I forgot to mention

Hello, this is Karin. My stomach is seriously growling. Hello? That's a wrap.

you