July 07, 2022 Author: Heather Connor, Realtor
What exactly are earnest funds and how are they handled in a resort community like Crested Butte?
There are three basic things you should know about earnest funds:
Funds that Show “Good Faith" to the Seller
Earnest funds are a good faith measure that you as a buyer give to the seller showing that you intend to carry through the contract unless something should show up during the contingency period.
It Is Not a Downpayment
However, don’t be confused–any amount that you send to the title company will be credited on your final buyer settlement statement. This means that if you are getting a loan and putting a downpayment down, it can be credited towards that amount of cash at closing. Contingencies allow you to get out of a contract in good faith while protecting your earnest funds and allowing you to walk away.
3% - 5% of the Contract Price
Here in Crested Butte, what’s really normal for us is anywhere between 3 to 5% of the contract.
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