Earnest money, the initial deposit a buyer makes to demonstrate their serious intent to purchase a property, is a critical first step in a real estate transaction. For realtors, understanding the nuances of earnest money handling and effectively guiding clients through this process is essential.
Best practices include ensuring the purchase agreement clearly outlines the amount of the earnest money, who will hold it (typically the title company’s escrow account), and the specific conditions under which it can be released to either the buyer or the seller. Realtors should advise their clients on the appropriate amount of earnest money to offer, considering local market conditions and the competitiveness of the offer.
When acting as the escrow agent, Tier 1 Title adheres strictly to the terms of the purchase agreement regarding the holding and disbursement of earnest money. We provide clear documentation and ensure that funds are handled securely and in compliance with all applicable regulations.
Realtors should also be prepared to explain the implications of earnest money forfeiture should the buyer breach the contract without a valid contingency. Clear communication and setting realistic expectations with clients from the outset can prevent misunderstandings and ensure a smoother transaction.
