Earnest Money - EMD - Deposit - whichever term is used in your locale it is extremely important to know what it is, what it is used for and what the appropriate amount is. I will use real life to demonstrate the importance of educating other professionals, buyers and sellers the necessity Earnest Money.
I have a buyer couple from out of state. They are the nicest, most hard-working, upstanding people that
you would ever want to be around. They placed their property for sale in the "other" state with Agent X so that they could start the preparations for the move to North Carolina. It didn't take long. Agent X received an offer from Agent Y that was representing the buyer. The initial offer came in with $0.00 Earnest Money. Let me put that a few other ways for you to understand. ZERO - $o.oo- zip, zilch, nada.
I was not privy to any of the negotiations with their "other" property as things happened literally within hours. Their agent, Agent X, countered with earnest money of $300.00. Again, for emphasis, THREE HUNDRED DOLLARS! I did not know any of this. When I would ask my buyer any questions they said that their agent was handling things beautifully. Okay.
We find THE house in the Wake Forest area. I mean THE house! Their property is under contract so all is contingent. Before writing our offer I informed my buyer that I needed a copy of their Offer To Purchase for the property in the other state. I wanted to be sure that the contract looked good and, of course, had to have it when we submitted our offer.
Agent X obliged and emailed me the contract. I was FLOORED when I reviewed it. I immediately called my buyers (Agent X's sellers) and asked if they understood what the earnest money was for, what did they know about the buyer, were they pre-qualified or pre-approved, etc. I then explained that if the deal feel apart and provided the stars aligned perfectly that they would only be entitled to $300.00. Again, I was informed, no worries - "Our agent is great and this is solid."
Once my buyers had reviewed the information that I gave them by way of comps, etc they were prepared to make their offer. When it came to Earnest Money they were floored. I explained to them that customary for our area is 1% - 3% of the purchase price. They couldn't understand why. I explained to them what earnest money is for. It can be viewed as "good faith". It can convey a level of seriousness. By putting up a larger amount of earnest money it shows the seller that you are serious about buying their house. It also indicates that you have taken the steps necessary to be pre-approved since you (as the buyer) may lose that money should the deal fall through. It is a level of commitment to the process. It is an indicator of your intentions.
Once it was explained my buyers understood completely and were now kicking themselves for not asking for much more in their transaction with Agent X and Agent Y.
Moving forward, all seems to be going along quite well with one exception. There was minimal communication between myself and Agent X. Not due to a lack on my part. I emailed, I called and I even sent up smoke signals - nothing in return.
First closing date of July 10 approaches. My buyers lender says it's a "go" for closing. FINALLY I hear from Agent X and I am told that there were a few hiccups. Okay - we've all dealt with those - they happen. We pushed the 
DENIED! By TWO LENDERS and a Mortgage Broker!
My buyers deal has flopped. For all of my buyers troubles they "might" get $300.00. That's it! They now CAN'T move to NC and the husband will have to call Monday to decline the position he was offered here. Not only can they not buy the house but their life has been dramatically altered. Will my buyers lose their $1500.00? Technically, they should. However, the other agent here and myself have been in very close contact and they have been a dream to work with. There may be a chance that it will be returned to my buyers.
So, to whomever is reading this, whether buyer, seller or fellow agent - PLEASE be sure you understand every piece of an Offer To Purchase and the consequences should a deal not go through. Don't let any agent rush you through a contract - take all the time you need to really understand it!
As for me and my buyers? We'll figure something out - that's what I am here for. I have listened to numerous tearful phone calls this afternoon. It was my job to tell them that we will work through this. Just because this deal didn't work doesn't mean that their aren't alternatives.
Be educated, be wise and play nice in My Back Yard....
Whether you are buying or selling Real Estate in Wake Forest NC it just makes sense to use a Realtor® that knows the area! I live here, work here and play here - I call Wake Forest NC home! For more information regarding Wake Forest NC be sure to visit my websites:
- Leesa Finley - Homes for Sale in Wake Forest NC, Wake Forest NC schools, restaurants, shops, entertainment and MORE....
- Circa Properties - My company website with information for the entire Raleigh NC area including Cary, Apex, Garner, Franklinton, Youngsville, Holly Springs and MORE....
Here it is! Are you ready for it? Time to gear up, "feed" those brains, buy the new sneakers and get those bedtime routines polished up -
One of the most exciting things about living in Wake Forest are the wonderful events and activities that take place throughout the year. They provide a great opportunity for residents to partake in the community, meet new friends and just have a good time! Every week I highlight what is upcoming for the following week in Wake Forest and I hope that you have found the information useful in planning your week.
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have noticed lately that there still seems to be the misconception among the general public that there is a set commission that a Real Estate agent (whether Realtor® or not) charges to sell your home. There simply isn't which leads to another question....
So, if the end result is ultimately the same - GET YOUR HOUSE SOLD - then the burden rests with the consumer to do their homework and interview many Real Estate agents before trusting one of their biggest transactions to another. Interview Real Estate agents from both fields - Limited Service and Full Service - choose the agent with whom you are comfortable and feel you can trust, confide in and will serve your best interests. Again, each seller is different, each Real Estate firm is different. This is a service based field - as with any other service oriented company there is a broad range of prices for services to pay as well as services offered.
can take my car to the local mechanic who I trust and have the same work done by someone that I know and have confidence in. No flower, no coffee and doughnuts, no car wash and vacuum. The same quality work was performed, the same diagnostics were done and I was somewhere that they knew me, cared about me and my circumstances and I was comfortable. You can put all the frills on a service but that doesn't guarantee the quality or professionalism.
