8 Earnest Money Blunders First-Time Methacton Home Buyers Make

No one wants to make a mistake when it comes to money.  People curse themselves when they lose their wallet with fifty dollars in it.  Imagine losing thousands of dollars over a simple misstep. There are many ways first-time Methacton home buyers can mess up when dealing with earnest money.  

Pay attention to these eight blunders other Methacton home buyers have made to avoid the same fate.

What Is Earnest Money?

Someone that has not bought a Methacton home may be unaware that earnest money is something they will need.  An earnest money deposit is held by a third-party and is usually two percent of the purchase price of the home.  Be aware that are some situations where buyers can pay up to ten percent.

This deposit is used to show the seller that the buyer is ready to buy the home and is willing to put money down to prove their interest.  At the end of the sale, it will be used to pay closing costs or part of the down payment.

What to Offer

Many Methacton buyers are advised to state their earnest money deposit in their initial offer.  Sellers may overlook buyers who have a low deposit. In a competitive market, it is important that buyers put more earnest money down than their competitors to get the seller’s attention.

This can be scary.  If the Methacton buyer defaults on the contract for any reason the deposit may be lost.  Someone that has put down thousands should tread carefully so they do not lose that money and end up without a house.  

While it seems steep to offer thousands in earnest money, simply think about it as a pre-paying part of the down payment.  

Contingencies

Contingencies are in place to protect Methacton buyers and sellers.  But Methacton buyers that are trying to make their offer look better may forgo some contingency.  Popular contingencies include loan, appraisal, or inspection contingencies. If any of these items fall through the buyer is able to get their earnest money back.  

A buyer that decides they do not need a contingency can run into trouble.  Someone who thinks their loan is going to go through no problem may forgo their loan contingency.  When it comes time to get their loan finalized, and something goes wrong, they are not owed their earnest money back that they have already invested.

Dates

It is extremely important to pay attention to dates.  Any date that is specified on a contract is not a suggestion.  There is no wiggle room once a date has passed. Missing any important dates can force a Methacton buyer to restart the process and lose their deposit.

Be Wary of Properties

Alway keep in mind that Methacton sellers want to get rid of their property.  They will not outright lie about the condition of a house but they may not be forward with information that could persuade a buyer to have second thoughts.  

Be especially careful when dealing with foreclosures since these properties can have major problems. Earnest money could be wasted if a buyer backs out on the contract after it is too late.  

Contracts

A Methacton buyer has to pay attention to what they are signing when it comes to contracts.  If a sale is going to fall through, both parties have to sign a document that states the sales contract is void.  A buyer should wait to sign the document until they have gotten the earnest money that is owed to them. In the event, the seller refuses, the buyer can refuse to void the contract which would stop the seller from trying to sell to another party.  

Buying While in Honeymoon Phase

Everyone loves a fancy house that has been recently updated and painted.  It can be hard to look past the new appliances and cabinets to see the problems with the Methacton house.  Avoid making an offer too soon. Visit the house a few times to really get a feel for what it will be like to live there before making an offer.

Backing Out Without Reason

A buyer that wants to back out of a Methacton sale because the house has major foundation problems or if an appraisal came back too low has a valid reason to fight for earnest money to be returned.  However, simply deciding it is not the right house is not.

There must be valid reasons for backing out of a contract for the earnest money to be returned to the buyer.  Otherwise, they have to simply leave it behind.