Congratulations! On finding a property, you want to buy. The next step now is to show your commitment to the seller. The only way that you can do that is through the Earnest-Money Deposit. It may sound easy, but if you are not careful, you may dig yourself into a hole. Here are mistakes that you should pay attention to.
- Not Understanding the concept of Earnest-Money Deposit
As a home buyer, you need to know what EMD is. Without the proper information, you will find yourself making avoidable mistakes. Earnest-Money Deposit is the money that you pay to the home seller as security for the home. The amount money is negotiable between the two parties involved, but the standard price is 1% or 2% of the total purchase of the home. The amount paid is usually used as a down payment towards the purchasing of the property.
- Not offering a substantial amount of money
The real estate market is very competitive, and that why you need to ensure that you offer a rate that will grab the seller’s attention. Take caution when you are setting the offer; too little and the seller will walk away or too high, and you risk the chance of losing everything. Take time to weigh your options, and decide whether you want to lose the home or the Earnest Money. Keep in mind that you will have to pay the down payment for the house within the first 30 days. If you are not sure about the percentage you need to give, you can consult Real Link.
- Not paying attention to the contract deadlines
The home purchase contract includes all the necessary information that pertains to the transaction including the time frame. The timelines set by the home owner is what determines the time frame for completing the transaction. It is, therefore, important for you to understand the deadline just in case you want to terminate the contract.
- Deleting the contingencies from the contract
Removing the contingencies from the contract may cause you to lose more money. For instance, if you decide to remove the contingency on loan and the loan is approved, then you will lose your EMD. Never give up your right to cancel the contract unless you are sure that the deal is 100% secure. The contingencies provide you with legal protection in case the deal doesn’t go through.
- Not checking the deal
Most foreclosures are sold ‘as is.’ That means that the homeowner has not made any improvements at the point of selling. If you buy a home in this condition, you need to be aware of the risks. Inspect the house first before you give you give out the EMD. Failure to do so may cost you money in case you change your mind on buying the house.
- Voiding the contract
The sale of the house is not complete unless both the parties involved sign. You should never sign the contract unless you are sure of the EMD that you will get.
- Buying the home on impulse
Never purchase a home on impulse because the probability of making mistakes is too high. Make sure that you are serious about the deal before you proceed. This is because if you develop cold feet, you may end up losing your money.