Under Contract: What Now?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your Realtor's advice) so that escrow and settlement go as smoothly as possible.
You will be asked for a earnest money on the home you are purchasing. You can choose to put down as much or as little as you want (your trusted real estate advisor can help you determine the amount). Remeber that the more you put up for earnest money the more enticing your offer will be to the seller.
During this period of purchasing your home, you are going to need settlement company to act as an independent third party handling the closing of the transaction. The settlement company will hold your earnest money and coordinate much of the activity that goes on during the settlement period. This earnest money check may also be held by an attorney or in the broker's trust account. Make sure that there are sufficient funds in your account because this check will be cashed.
Assuming the sale goes through, your earnest money will be applied as a credit to you at closing on your settlement statement. In some instances if a sale falls through you may be entitled to receive all or some of your earnest money back. However, there are some times where the seller may be able to keep this money as liquidated damages. Prior to writing an offer, make sure you discuss the details of the purchase agreement with your real estate agent.