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When Does an Earnest Money Check Get Cashed?

Earnest money, sometimes called good faith money, is an essential part of an offer to purchase real estate. It’s essentially a deposit that tells a seller that you are serious—or earnest—about wanting to buy their home. If you’ve ever bought or sold real estate, you’re probably already familiar with the term. What you may not know, however, is what happens to that earnest money check once you hand it over to your real estate agent.

When is the earnest money check cashed?

Once your offer is accepted, the earnest money check is usually deposited into an escrow account, where it is held until closing. That money is collateral that guarantees your promise to purchase the house. So before you write that check, make sure you have the funds available to cover it, as it will be cashed within a few days of your offer being accepted. As long as everything goes off without a hitch, that amount is applied toward your down payment or other closing costs. It’s sort of like prepaying part of your closing costs. There will be a section on the closing statement that specifies the earnest money amount and shows it being applied to closing costs.

What happens if the sale falls through?

Do you just lose out on that earnest money, or will you get a refund? Simply put, as long as you, the buyer, aren’t at fault for the sale being canceled, you’ll get your earnest money back. For instance, let’s say the sale of the home is contingent upon a satisfactory home inspection, and the inspection report comes back with one or more issues that the seller says they won’t repair. In a case like that, you’re more than welcome to back out of the sale without fear of losing your earnest money deposit. If you decide to back out of the sale for a reason not spelled out in the terms of the purchase agreement, then the seller will more than likely get to keep that earnest money.

Why isn’t the check just cashed at closing when other closing costs are paid?

Earnest money needs to be held by a neutral third party, usually an escrow or trust account, for the sake of fairness and transparency. Otherwise, a less honest buyer could just call their bank and stop payment on the check when the seller is legally entitled to keep the funds.

How-To Tuesday: Win a Bidding War in a Seller's Market

In a seller’s market, when inventory is low and the number of buyers is higher, multiple-offer situations are extremely common. It’s perfect for homeowners who are trying to get top dollar for their houses, but it’s not so great for buyers who are trying to find a new home. It’s incredibly frustrating to be been outbid time and time again by others who are able to offer more money or better terms. How on Earth are you supposed to afford a new home when prices keep getting raised by competitive buyers?

By getting creative.

Believe it or not, it’s possible to appeal to a seller without stressing over your initial offer. Take a step back from the paperwork and ask yourself what you have to offer that other buyers don’t. What can you give or do that other buyers cannot?

Waive a Contingency

Even if the dollar amount of your offer is less than others, you can make the offer look more appealing by letting go of some contingencies. For example, if you’ve already been approved for a mortgage and are confident that it will go through smoothly, think about waiving the mortgage contingency. And if you really, really want the home, don’t ask for extras. Take out that clause that asks for a home warranty or new appliances. The less a seller has to do, the better.

Sweeten the Deal

Do you have access to something that’s useful or hard to get? Use it as a bargaining chip. Maybe you can offer tickets to a certain sold-out performance or sporting event. Perhaps you own a moving company and can offer to help the seller out when moving day rolls around. Think of something or some way to help out that would be valuable to this specific seller.

Write a Letter

This isn’t a new strategy, but it’s still a good one. Include a handwritten letter with your offer, introducing yourself and your family and explaining to the seller exactly why you want to buy their house. They might be more inclined to sell to a loving family than an investor who might not ever step foot inside the house. Go a step further and include a photo of your family with the letter. It never hurts to appeal to someone’s sentimental side!

Include an Escalation Clause

Simply put, an escalation clause says that you will outbid other buyers’ offers by a certain amount up to a specified cap price. For instance, let’s say you offered $200,000 on a home. You might include a clause that says you will automatically raise your offer by $5,000 over any other buyer’s offer as long as that amount doesn’t exceed $225,000. It’s a great way to compete with possible higher offers without offering more to begin with. Just make sure you aren’t presenting a lowball offer just to see what you can get away with. That could offend the seller and they might just ignore your offer altogether.  

Work With Shorter Time Frames

If you know your mortgage lender can close the deal in less than the typical thirty or so days, you might want to offer to close sooner. Keep time frames tight on all inspections and other contingencies as well. The ability to move things along quickly inspires confidence in the seller that you’re as ready to get to the closing table as they are.

Above all, be sure to consult your favorite real estate agent about the best strategy for you and your specific situation. Before you decide to try any of the above tactics, speak with your Realtor® to make sure they’re on board. There might be certain local laws or customs that contradict what you want to offer.

Spruce Up Your Curb Appeal for the Fall Season

Curb appeal always counts, and autumn is one of the best seasons for creating a truly inviting first impression of your home. We may still be hanging out on the beach and wearing shorts and flip flops in the Lowcountry, but we can still take inspiration from falling leaves, hayrides, pumpkin patches, and apple orchards. If you’re trying to sell your home this fall, you’re in luck. Here are some of the best ways to take advantage of the season and spruce up your curb appeal for the fall season.

Keep the lawn free of leaves and debris.

It might be hard to keep up with the falling leaves once the weather begins to cool off, but raking more frequently actually equates to less work and a healthier lawn. The more often you rake, the fewer leaves you’ll have to collect each time. This also helps cut down on the number of leaves left to decay and damage your lawn.

Plant fall flowers.

When warm weather plants and flowers begin to fade and wilt for the season, spruce up flower beds and window boxes with species that thrive in cooler fall weather. Flowers like mums add a pretty splash of color to any walkway, flower bed, or front stoop.

Revive your home’s exterior.

Some homes take a real beating during the summer thanks to the scorching sun and summer thunderstorms. Take advantage of the slightly cooler weather to clean up the exterior of your home. Make sure the roof, gutters, siding, and windows are all clean and free from damage. Refresh any paint that might have faded or chipped during the harsher, hotter months.

Add or maintain outdoor lighting.

It’s getting dark a lot earlier these days, which means there’s a good chance you either leave or come home in the dark or dusk. Now’s a great time to add some outdoor lighting for safety’s sake. As an added bonus, illuminated pathways and porches are inviting and warm.

Pull back on the themed decor.

If you’re trying to sell your home this fall, save your usual seasonal decor for next year. Too many holiday-themed decorations (think scarecrows, inflatables, and spooky jack-o-lanterns) can be distracting to buyers who want to see your home at its best. Go with something more neutral and simple like a rustic, fall-themed wreath and a couple of tasteful pumpkins by the front door.

Consider a new color for your front door.

Try out a new warm, autumn color on your front door. Go with a warm red, deep eggplant, moss green, pumpkin, or gold. You might want to think about adding the color to shutters or trim too. Then coordinate your flower beds so they don’t clash with your newly painted door.

6 Real Estate Documents to Keep After Closing Day

There’s a lot of paperwork involved in the buying and selling of real estate.

A lot

Those of us who dislike clutter and unnecessary papers hanging around may have the tendency to want to toss them after closing day. Honestly, it’s fine to shred a lot of those papers, but there are some documents you’ll need to keep stored just in case.

Purchase Agreement

The sale of a house always begins with the purchase agreement, from the first offer to the final ratification. The purchase agreement is a legally binding contract between the buyer and the seller. It lays out the purchase price and all the terms and conditions of the sale, and each and every detail must be strictly followed and obeyed. It’s important to keep this document just in case there’s a condition or contingency that isn’t met. You’ll need proof of the terms if you intend to take legal action against the party that isn’t following through.

Any Addenda or Amendments

These are documents that alter the terms of your purchase agreement. They most often relate to a home inspection, appraisal, or survey. Say the home inspection reveals an issue with the roof and the sale becomes contingent upon the seller having the issue repaired. This will change the terms of  the original purchase agreement, so you should keep these with the agreement just in case.

Seller’s Disclosure

Sellers are required by law to fill out a seller’s disclosure that discloses certain problems or issues with the home along with any repairs that have been made. You should absolutely keep this document to prevent any “he said/she said” situations. For example, if you move into the home and find that a seller has done a shoddy repair job or unpermitted addition and tried to hide it by not disclosing it, you may have legal recourse.

Home Inspection Report

After the inspection is completed, your home inspector should provide you with a report that includes a detailed list with photos of their findings. Keep this on hand for any future repairs you might need to make that you don’t ask the seller to perform. That way you’ll have a record of everything you need to take care of and can even use it as a reference for any contractor or handyman you might hire in the future.

Title Insurance Policy

We’ve talked a bit before about title insurance and why you need it. There are separate policies for lenders and buyers, so it’s always a good idea to get one to protect yourself. Basically, it offers protection against any liens against or claims to the home that already exist and could affect your ownership rights. Keep your title insurance policy information in case a former owner or lienholder tries to claim the home—even years down the road. This is a rare event, but believe it or not, it has happened.

Property Deed

The deed to your home is the legal document that confirms or conveys the ownership rights to a home. It’s typically mailed to you after it’s recorded in the public records office. The deed is the only physical proof that you legally own the home you live in. While most other records will be kept by your mortgage company, closing attorney, and/or title company, they will not have a copy of your deed. It’s mailed directly to you, so they’re not legally required to keep a record of it.  

How-To Tuesday: Remove Scratches From Wood Floors

Remember when your wood floors were shiny and new and blemish-free? Remember how you used to attach felt circles to the bottoms of all your furniture legs and only clean your floors with the most highly recommended wood cleaners? Remember when you swore you’d always keep your wood floors pristine? Well, life happens, and it happens all over those beautiful wood floors. No matter how careful you are, you’re going to end up with scratches at some point. But don’t worry! There’s no need to completely strip and redo your floors. Many scratches can be erased or repaired easily enough with just a little elbow grease and not much time or money.

Hide minor scratches with minimal effort.

If you have just a few small scratches to repair, try covering them up with crayons or Sharpie markers that match the color of the wood stain. A regular old Crayola crayon or marker will do perfectly fine in a pinch, but there are also products specifically designed the purpose. Items like Minwax Stain Markers include both stain and urethane to protect the finish. Don’t worry if you don’t get an exact color match. Just mix two or three colors to get close enough to the right shade. Most wood floors have color variations anyway.

Try a homemade remedy.

Mix equal parts olive oil and vinegar and pour some directly over the scratch. Let it work its magic for about 24 hours, wipe it clean, and then repeat until the scratch is thoroughly camouflaged. The mixture of olive oil and vinegar works to remove dirt, moisturize, and add shine to the wood.

Use a wood refresher to fix light fading or scuffs.

Products like Bona Pro Series Hardwood Floor Refresher or Minwax Hardwood Floor Reviver are specially formulated to renew the wood without refinishing. Give the floor a good, thorough cleaning before applying the product, and then allow for ample drying time after product application. You’ll need to reapply the product after several months. Note that these products should not be used on factory-finished or wood laminate floors.

Spot sand and refinish deeper gouges.

Some scratches are more obvious and require a little more attention. First, sand the area with the grain using fine-gauge steel wool or lightweight sandpaper. Fill the gouge with wood filler rather than wood putty. Stain takes better to filler than putty. Avoid metal putty knives; a plastic one will help you keep from adding more scratches to the wood. Seal the area with polyurethane (or whichever product was used to seal the floor originally).

Safeguard your floors from future damage.

Place doormats in front of all exterior doors to catch stray dirt, leaves, and other debris from outside. Don’t wear shoes in the house, and encourage guests to remove theirs when they come in as well. Dirt and grit are huge enemies of wood floors. Sweep often to help keep dirt and debris off the floors. When moving furniture, always place protective pads (or an upside-down carpet) underneath the legs to prevent scuffs and scratches. Keep pets’ nails neatly trimmed to help prevent the floors.

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