What Is Earnest Money?
Earnest money is a deposit the buyer puts down towards the purchase of real estate. It represents that the buyer is indeed interested and serious about purchasing the property in the contract.
This gives the seller some protection as they will most likely be taking their property off the market while the buyer is getting financing. If the buyer simply changes their mind, they will most likely forfeit their earnest money. If the buyer has tried everything possible and is turned down for financing, however, they will not lose their earnest money and it will be returned to them.
It is either presented as a check along with the contract or is delivered to the listing brokerage soon after contract acceptance; depending on what the contract states.
With Chicago suburb real estate it is customarily held by the listing brokerage, although in some instances an attorney will hold onto the earnest money deposit. Even though someone else is holding this money, it is the buyer's money to be used towards the down payment and closing costs associated with the purchase of the real estate in the accepted contract.
At the real estate closing this amount will be credited toward the buyer. This is a simple explanation and you will need to have your agent explain the contract you will be signing in detail. Make sure you understand as this is money that could possibly be forfeited.
If you have any questions or comments regarding this FAQ please Contact Me or give me a call at 708-536-8200.