Earnest Money Question
Just wanted to know if the earnest money typically goes to the downpayment ?and if the building is not complete till 2006, when do you actually need the downpayment. I just want to know generally how it works in most cases. Thanks
Hand money and down payment are two seperate issues. Hand money is an act of good faith and may or may not be refundable. In all contracts I'veseen hand money is given with an offer to purchase contract and a down payment with a sale contract. Your offer to purchase would state when sales contract and down payment would be needed.
This is just my experience and my way of doing things.
Lori
[addsig]
Earnest money is very customary. In my area a Sales Contract on a house will have $500 earnest money. A development deal will have $10k and enough contingecies that I don't know why they even bother with the earnest money. If you buy land from a timber company, they will require 5% hard, non-refundable.
I was envolved last year in a deal that required $1M hard earnest money.
When I am buying I hate earnest money. It is all cash, you can't borrow it, and it can be very hard to come by. However, you can use excessive earnest money as a tatic to negotiate a better deal. You will be amazed at how well this stratagy works.
If I am selling a property I use earnest money to make sure that I have a serious buyer. Keeping in mind the customs of the market, I always try to get as much hard earnest money as possible. Always be aware that too much can be a deal breaker.