PURCHASE

The Initial Deposit Amount, also known as the Earnest Money Deposit, is a sum of money that’s included with your offer to purchase a home, and indicates to the seller that you are serious about buying the home. This sum of money is coming from a portion of your funds that you’ve allocated toward purchasing the property.

For example, let’s say your down payment + closing costs is $60,000.
You make an Earnest Money Deposit of $15,000.
So, the remaining funds you would need to provide to complete and close your purchase is $45,000 – since you already deposited $15,000 with your offer.

Contingencies are components of the contract that act as safeguards that allow you to back out of the real estate contract if certain conditions aren’t met.

For example, you have an “Investigation of Property” Contingency where you can obtain a home inspection, and if the property is not in satisfactory condition, you can re-negotiate with the seller on getting a credit toward your closing costs or having them repair any major issues. If an agreement can’t be reached, the Contingency gives you the option to cancel/back out of the purchase and have your Earnest Money Deposit returned.

Other common contingencies are the:
Appraisal Contingency – where the purchase is contingent on the value of the property appraising at the agreed upon purchase price; and
Loan Contingency – where the purchase is contingent on the buyer being able to obtain suitable financing.

Your real estate agent can also go through all of the details of your offer/contract with you.

Presented by: Jesse Haro – NMLS 2023964 | DRE 02134504