“Show me the money!” Who could forget these famous words said by Tom Cruise in the movie Jerry Maguire? Similarly, many sellers feel this sentiment when it comes to accepting an offer on their home.
Earnest money presents good faith with a buyer’s offer – a buyer is so serious that they will present a cash deposit with their offer to show their monetary interest in purchasing a property.
When seller accepts the offer, the buyer pays earnest money typically to the seller’s title company. Usually this is within the first three days following acceptance. Buyers can choose to deposit earnest money via electronic transfer, cashier’s check, money order or wire transfer. According to Meridian Title Escrow Closer Courtney Winn, most individuals pay earnest online because of the convenience. Buyers can also pay by personal check, but Winn notes that this can take up to 10 days to clear.
The earnest money is deposited into an escrow account. It’s important to note that the money will be cashed and deposited from one’s account at the time it’s presented, not at closing. The amount varies. In the past, sellers asked buyers to submit one percent of the purchase price, but more and more buyers are presenting a lesser amount. A standard I often see is $1,000 or more. This deposit will stay in the escrow account until the closing date and is applied as a credit toward the buyer’s purchase price. However, in the instance that both parties cannot agree to terms at some point in the contract, and either party wants to cancel – both seller and buyer must agree in writing as to the return of the earnest money. According to Winn, most of the time the money is disbursed back to the buyer.
Johnson County remains a seller’s market. This continues to present competition amongst buyers. I also see nonrefundable earnest money. This is typically deposited after a specific timeframe in the sales contract, such as following inspection or appraisal periods. Winn notes that she usually sees nonrefundable earnest deposits on the sale of new construction properties.
Johnson County market update
This week in Johnson County there were 1093 active listings, and 1443 listings went under contract (Source: Heartland MLS, June 15, 2023).
About Maggie
Maggie is a ReeceNichols real estate agent and a third-generation realtor. It’s her passion to provide a professional and positive buying and selling experience to her clients. Maggie has been featured in Realtor.com, Apartment Therapy and in other publications. https://maggief.reecenichols.com/
Follow her on Instagram and Facebook for updates on the local market.
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