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Commonly Asked Questions About the North Oakland County and Lapeer County Home Purchase- What is the Deposit For? How Much Should it Be?

earnest money deposit for offer to purchaseWhen you  make an offer on a house in North Oakland County MI or Lapeer County MI one of the questions I will ask you is: How much of a deposit to you want to give me? Partially because it is a space on the purchase agreement that needs to be filled in, but mostly the size of the deposit shows the seriousness of your offer.

The EMD AKA earnest money deposit AKA good faith deposit AKA deposit ties you to the agreement. Once the offer has been accepted I need to have that check deposited within 48 hours (2 business days). You get the deposit money back if any of the contingencies fail to clear; e.g. you find problems on the home inspection and wish to cancel the purchase agreement, you are entitled to get your deposit back.

If all the contingencies are cleared and you just change your mind and want to walk away from the house, you lose your deposit and it would go to the seller. The larger the deposit is, the less likely you will walk for no reason. Or because you found a “better” home to purchase. From the seller’s perspective if you only have $500 at risk there is nothing to keep you from continuing to look at new listings and walking from the sale if you find something better. If you have $5,000 or $10,000 or more at risk, you are more likely to proceed to closing.

There are typically 4-6 weeks between writing the offer and closing. In between contingencies are being cleared; typically the home inspection, clean title supplied by the seller, and obtaining your mortgage which takes the bulk of the 4-6 week time frame. Once we proceed to closing your earnest money deposit is credited against your closing costs and down payment.

So basically, when making an offer to purchase a home in North Oakland County MI or Lapeer County MI bigger is better when it comes to the deposit.

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