This is a common question for many fir st time home buyers. As a first time homebuyer the whole home buyer process can be quite confusing. So what is earnest money? They say there are three parts to a legal contract when it a judge decides whether it is a legal contract.

The three parts of a legal contract are: So was there an offer? What was the consideration? Consideration in the real estate business is the earnest money. What is the earnest money? It is a check written as a deposit. We do not take cash very often. So where does the money go? You the West Bloomfield first time home buyer will write a check made out to the brokerage company.

Sometimes it is to your buyer's agent real estate company. Sometimes it is to the listing agent's company. The earnest money is a good faith deposit.

What is earnest money? | Detroit Michigan Real Estate

It shows that you are serious about buying that piece of West Bloomfield real estate. As they say you have money committed to buying the home or have "skin in the game". It does not matter if it is a lakefront home on Walnut Lake in West Bloomfield , a foreclosures in Dearborn, or a condo in Royal Oak. You have to put some sort of earnest money down.

So that is "what is earnest money" is! One of the questions home buyers ask me is how much earnest money do you put down? When you write your earnest money check you want to show the seller that you are serious about buying their house.

Just what is the right amout of earnest money? Sure you could write a bigger check for an earnest money deposit, but there is an potential issue when doing that.

In Michigan the earnest money check is only released when a mutual released signed by buyer and seller authorizing the brokerage company holding the check to release the check to one of the people in the contract.

Either the seller or buyer gets it. So if there is a dispute on who is to get the check, or if the seller is just being a jerk they can hold up the release of the money indefinitely. It could take court action to get the check released this rarely happens. Or the money will sit in the account for 5 years before it is released. So in my opinion put down enough to show the seller you are serious, but not enough that you cannot move on.

WHAT LAW IS THERE IN MICHIGAN THAT PERTAINED TO - Q&A - Avvo

So that is how much earnest money do you put down - just enough to show you are serious and not enough to worry about it being held in the real estate account for an indefinite time if there is a dispute.

My goal as your realtor is to try to protect you from making a mistake. I hope this Michigan home buying tip helps you understand what is the right amoutn of earnest money. If you are just getting started on your home search and need a good realtor give me a call We offer a great buyers bonus too.

We have helped so many buyers and sellers move. Read what my past clients have to say about me. Google "Russ Ravary Zillow" or "Trulia Russ Ravary" or on Yelp or Google.

Connect with me on Facebook. By the way if you know somebody else looking to buy or sell a home I always appreciate a referral. Find MI real estate agents and Commerce real estate on ActiveRain.

Michigan Legislature - Section

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January 27, Russ Ravary Keller Williams Realty "Helping make your next move easier!

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