When the buyer decides to buy a property, both seller and the buyer enter a contract that decides the final sales price and the down payment. The contract has nothing to do if the property fails in home appraisal or the inspection done later and reveals any problems in future. The contract proves the seller that the buyer’s offer to buy the property is earnest or in good faith and the buyer will make an earnest payment as a deposit. Or you can say that the Earnest payment is the down payment to the seller when the deal is finalized. Though the deal is finalized after inspections are done and the buyer finalizes its terms with the Bank NBFC for the mortgage loan or home loan.
If the deal fails due to any reason the buyer may or may not be able to claim for the earnest money, depending on the terms and conditions of the contract. If the contract declares that the property has to be purchased by a certain deadline and if this does not happen within the set time frame, the buyer probably won’t get refund of his earnest money. Even if the buyer decides not to buy the property due to any reasons not mentioned in the contract, he might lose the deposited amount. The earnest money is retained by the seller to protect him from any monetary damages due to the broken contract and keep the future damages out of the court. The buyer gets his full earnest amount in case the property fails in inspection or the seller terminates the deal.
Earnest money is a deposit scheme specially designed for the customers who shows good faith in the transaction. Earnest money is used in real estate transactions and allows an additional time to the consumer seeking finance. The earnest money means the deposit of good faith on a home loan to seller from the buyer. Providing the earnest money to the seller along with a solid contract clears the seller that the buyers have both resources and the desire to seal the deal. A considerable amount can help your offer to get selected over others.
Earnest money assures the seller that the buyer will not back out of the contract without any valid reason. The amount of earnest money varies as per the place, seller, a buyer’s interest in the property, competitiveness of the market, market specific factors and the price of the property. It is always better to take an opinion from an experienced real estate agent. A competitive market may require you to put more money to block the deal but to take a wise decision is also important. It is important to protect yourself without putting your finances at risk. Few terms and conditions can also be negotiated before signing the contract and to read the contract carefully can help you to know the acceptable reasons to back out from the contract.
Before investing or giving your hard earned money as earnest money to the seller, you are welcome at Mudra Homes to get a proper guidance along with further processing information. The team at Mudra homes will not only guide you regarding the property but also help you to find the right finance provider with the lowest interest rates and highest eligible amount.