Real Estate & Property Law

No Earnest Money: You Can?t Be Serious

By Peter Olson, Esq.

Oh, but I am.

Here?s Wikipedia?s definition:

An earnest payment (sometimes called earnest money or simply earnest, or alternatively a good-faith deposit) is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the purchase. When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations.

I?ve been working with a long term client regarding sale of real estate over the last months. And won?t go in to many details here but there was a shocker regarding a recent offer and contract (where eventually the buyer?s backed-out of the deal) where the listing real estate agent didn?t require nor take any earnest money from these buyers when they made their offer and subsequently backed-out.

UNBELIEVABLE!

And in the end the result may have been the same but it sure would have been nice if the potential buyer?s had a little skin the game?ya know, I think it?s called leverage.

Full post as published by Closing Real Estate in Chicago on February 10, 2009 (boomark / email).