When you buy a home in Georiga, sellers typically require that the Buyer pays Earnest Money (about 1% of the purchase price) when the home buyer submits the offer to purchase the home.
After you give your real estate agent that hard-earned Earnest Money check…. where does it go?
The best answer is: It depends.
Usually the Buyer’s Brokeraage Firm (the firm that represents you, the buyer) will hold the earnest money in a escrow account that is designated as their earnest money account.
Sometimes a 3rd party escrow company will hold the earnest money.
On occassion, the Seller’s Brokerage Firm will request that they hold the Earnest Money. This is a bit more risky for the Buyer, but with foreclosures and REO properties, this is common practice in Georgia.
Based on the terms in the residential real estate purchase and sale agreement, your earnest money is typically deposited within 2 to 5 days (but it may vary based on the terms of the contract). It is important that you have enough funds in your bank account, especially if the Earnest Money check will be deposited in the escrow account in the first week.
At closing, you (the buyer) will get your Earnest Money back. The closing attorney will credit the amount towards your downpayment and/or closing costs.
- Buyer’s Earnest Money is submitted to the buyer’s broker (or 3rd party) escrow account with the accepted purchase and sale agreement / contract
- At closing, the attorney will credit Earnest Money towards the Buyer’s closing costs and/or down payment
- If the Buyer doesn’t have any closing costs or a down payment, then the Earnest money is refunded back to the buyer at the closing table
Call Kerry Lucasse and the Nest Atlanta team anytime at 404.721.3001.
DEFINITION OF EARNEST MONEY (as defined by Wikipedia)
An earnest payment (sometimes called earnest money or simply earnest, or alternatively a good-faith deposit) is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the purchase. When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations.