Finance Bulletin

Earnest money is a sum of amount offered by any home buyer in North Carolina at the preliminary stage of buying a home or while giving the proposal for buying a home and this is mandatory for the home buyers in North Carolina.

Earnest money is something that makes the seller believe that you are a potential home buyer and very much interested to buy the home. So it works like a proof for the seller that he/she has been given the offer to sale the home and also for the buyer that he/she has already proposed to buy the home. Earnest money always has to be kept into the agent’s trust A/c and needs to be held there till the close of the deal.

Earnest money is not treated as a fee; rather it is treated like an imbursement which is paid in advance for buying a home and proves that you are serious about buying that particular home. Once the deal gets succeeded and closed the amount of earnest money again goes to the buyers.

Now here buyers would be very curious to know that what should be the exact percentage or correct proportion of Earnest Money. Generally it needs to be anything between 1 to 3 percent (%) of the price of the home. For example: if you purchasing the home for $300,000. Then the amount of earnest money you need to give would be between $3,000 to $9,000. However you need to be cautious about the terms & conditions regarding the earnest money for a home that is newly constructed. It has been seen that if you have proposed to purchase a newly constructed home quite often the home builder has a compulsory amount. So always make sure that the home builder is going with the standard terms & conditions of the State of North Carolina, else you might not get the earnest money back.

Now despite of using the normal North Carolina agreement there are sometimes when the earnest money falls into risks. For example:

1. As a home buyer if you sign the home buying contract and then breach it just because you have changed your mind.

2. If you fail to produce the loan application proof within the time.

3. In case if your loan has been declined but you can’t produce the proof of that and fail to close the deal.

Besides in competitive market the earnest money offered by a home buyer can really make his/her proposal more alluring to the seller or agent. Just offer more earnest money.