During a real estate transaction, a lot of money is on the line. Prospective buyers in Georgia may face an expectation to provide funds at different stages of the transaction, particularly if they move forward with a contract with the intention of purchasing the property. The buyer provides earnest money, or what is essentially a deposit on the property, as a way to show that they intend to follow through with the agreement.
Even at this stage, earnest money can be thousands of dollars. A seller may want a percentage of the asking price, commonly 5% or 10%, or the seller may want a flat fee, which could be whatever he or she deems appropriate. However, the more earnest money the buyer provides, the more serious the seller may believe that the buyer is about purchasing the property.
Of course, it is important that buyers do what they can to protect their earnest money until the transaction is complete, and that could include not providing an exorbitant amount as a deposit. Other ways to protect those funds include:
- Fully understanding the terms of the purchase agreement and under which conditions a seller may be able to keep the funds, even if the sale does not go through.
- Having contingencies of the buyer’s own that could allow him or her to walk away from the sale and get the earnest money back, which could happen if the home does not pass inspection or due to another major issue with the transaction.
- Only depositing the funds into an escrow account held by a legal firm, financial institution, real estate brokerage or similar third party.
Unfortunately, a situation could arise in which an unscrupulous seller gets his or her hands on the earnest money and attempts to steal it from the buyer. In such cases, the buyer could be at risk of losing thousands of dollars. As a result, if Georgia homebuyers find themselves facing this type of ordeal, they may want to look into their legal options for holding a deceitful seller responsible for those wrongful actions.