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  • How much earnest money should I put down?

    Posted on July 12th, 2010 admin No comments

    The earnest money deposit is a way for the buyer to demonstrate to the seller that they are serious.  The deposit can serve as satisfaction for liquidated damages if the buyer defaults on the contract.

    A few facts to keep in mind:

    • There is no set amount for earnest money.  It can be any amount that the buyer and seller agree on.
    • It doesn’t have to be money.  Boats, cars, your mother’s fur coat.  Anything that is recognized as value.
    • If the buyer’s offer to purchase is accepted the earnest money check is cashed and held by the buyer’s real estate broker in a special non-interest bearing reserve account or by an escrow company approved on by the buyer and seller.
    • If the buyer fails to withdraw from the purchase contract during his due-diligence period and subsequently can’t complete the transaction, the seller can claim the earnest money as damages and/or sue the buyer for specific damages.
    • Earnest money works both ways. If the seller fails to complete the transaction, then the buyer can take back their original earnest money AND an equal amount from the seller for their damages.

    In the real world a buyer would make an EM deposit of about 1% of the sales price.  More if they want to rock the seller’s world.  Look at it from the seller’s perspective.
    You are asking them to accept your offer, take their home of the market, forgo all other offers and wait for you to close.  If you fail for whatever reason they are out the interest and taxes of at least one house payment, marketing time and will then probably loose the contract on the next house they wanted to buy.

  • Did you know that you can limit the buyer broker agreement?

    Posted on June 21st, 2010 admin No comments

    With the new Utah Buyer Brokerage Agreement it is possible to limit the scope of the contract to a particular property by address.
    Sometimes a buyer may want to take baby steps in developing a relationship with an agent.  Many experienced agents don’t even ask that such a contract be signed until they have a good working relationship with the buyer.  Because after all, exclusive agency is a big step and you want to make sure you have the right dance partner.