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Will I get my earnest money deposit back if my offer is not accepted?

3/5/2019

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Before I answer this question, let's quickly review what the earnest money deposit actually is. When you put in an offer on a property in Silver Spring, MD and beyond you will have to provide details about your earnest money deposit - on the very first page of the Residential Contract of Sale. The earnest money is expressing your commitment to the seller and is a show of good faith. It communicates that you are ready and able (in combination with a loan pre-approval) to buy and are also willing to accept some risk.

Although there is no law telling you how high your earnest money should be, there are customs & expectations. In Silver Spring, MD and beyond, 1% of the sales price is a good rule of thumb to go by. Keep in mind, however, that a competitive market may call for more. In that case, a higher earnest money deposit can give you the edge. Rounding down a bit can also be acceptable in a slower market, when there is no competition from other buyers that is. What I not suggest doing is to low-ball it. All a $1,000 deposit on a 500K house will communicate to a seller is that you don't really care about the house and may not be very serious about buying and, perhaps, bail when you get the chance. Losing 1K is a lot less painful than losing 5 or 10K after all. 

It's important to point out that you are not actually giving the seller your earnest money when the offer is submitted - your cash does not end up in the seller's house, nor the listing agent's pocket, it actually stays in your bank account for the time being. What you do submit is a copy of a check or proof of funds if you intend to wire the money. Only when the seller and you have come to an agreement and the contract has been ratified will you hand over the check (or initiate the bank transfer). Depending on the terms of the contract, your earnest money will either be held in a a non-interest bearing (typically) escrow account by your buyer's broker or the title company (that you choose). In Silver Spring, MD and beyond the check must be collected within 3 days if held by the broker and put into escrow within 7 days. 
Back to the original FAQ: will I get my earnest money deposit back if my offer is not accepted? 
As long as you are in the offering stage - including negotiations back and forth - your money is still in your bank account. You may have already handed over the check but your buyer's agent/broker is holding on to it. Therefore, should you not come to a mutually acceptable agreement with the seller, you will not make a deposit, and your check will be returned to you or you can shred it - unless of course, you decide to quickly submit an offer on a different home. 
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Could your deposit be at risk and could you actually lose it? That is a different question and one that I have answered previously. 

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How do I know if a house is "the one" for me? 

7/11/2014

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How will I know if it's the right house for me? How will I know if it's the one? This is a question frequently on the mind of First Time Maryland Home Buyers. It's the first time they are going through the process, thus it's very understandable. They are often on information overload, want to make sure they are getting a good deal and are not missing out on something better. They may have heard (horror) stories or received too much well-meaning advice from too many different sources.

The answer is quite simple actually: you just know. When you walk into your future home, you will know. You'll feel the excitement building as soon as you pull up in front of the house. When opening the front door, it will feel like opening the door to your home. You will feel comfortable being there and you'll be able to easily envision yourself living there. You'll check off many (or all) of the items on your must-have list and will find yourself easily willing to compromise on your would-be-nice list.

Should I sense a bit of doubt or uncertainty, then I always pose the question: If this house were to go under contract tomorrow, how would you feel? If you answer is: It would be OK, I would just move on and look for another option. Then it's not the one for you. But if your answer is: I love this house, I would be upset! Then let's dig deeper, pull the comps, review the disclosures, talk to your loan officer and move forward because it sounds like the one for you.

And if it is, all the other pieces of the home-buying puzzle will fit together, too! If it doesn't work out, it's not the right house!

For me, one of the most exciting aspects of assisting Silver Spring, MD home buyers is that I will be able to tell, too, if it's the one for you. It's a combination of experience, listening skills, capacity for empathy and being diligent in my research, I always know when my buyers and I have found the right home. It's a terrific moment - one that I love to experience again and again.

Silver Spring, MD Home Buyer FAQ: How will I know if it's the right house?
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Why shouldn't I ask the listing agent for help?

5/17/2014

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One of the the biggest (and most persistent) myths in Real Estate is that home buyers will get a better deal when buying the house directly through the listing agent. Try as I might, I just cannot figure out the reasoning behind it!

Silver Spring, MD Buyer FAQ: Why shouldn't I just ask the listing agent to help me?

The listing agent is the seller's agent and as such he/she has a fiduciary duty to the seller. Any information that you, the buyer, disclose to the listing agent can and will be used against you in negotiations. Buying a home through the listing agent will not put you in a better negotiation position and will not save you money.

It is the listing agent's job to get the highest and best price for the property. Why would they assist you in getting the most bang for your buck? They won't and they can't.

In Maryland a REALTOR® can only represent one side, either the seller or the buyer but never both. The broker of a company can act as a dual agent and designate agents for either side. The listing agent can also assist a buyer with submitting an offer but said assistance is very limited.
Which contingencies should you include? The listing agent can't answer that question. Can you prepare a Comparative Market Analysis for me so I know how well (or not) the house is priced? Negative! Is the seller willing to pay my closing costs? No!

When buying a Silver Spring, MD home it is in your best interest to hire a buyer's agent to represent you. You shouldn't ask the listing agent for help because his or her loyalty lies with the seller. Anything you say that could somehow help the seller in negotiations has to be reported to him.

Buying your new Silver Spring, MD home with the help of the listing agent will not get you a better deal and will not save you money. 


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Do I Really Need A Buyer's Agent?

8/5/2012

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There are literally hundreds of thousands of property sites that allow you to search for your new home online based on your criteria. There is also a ton of how-to and how-not-to advice 'out there' and if you are able to identify the relevant information for you, you might ask yourself "Do I really need a buyer's agent to purchase a home in Maryland?".

Technically, the answer is "No, you don't" but why wouldn't you? Yes, you can house hunt online, you can even arrange to view the homes you are interested in and the listing agent can give you the necessary paperwork. But that is all the assistance you can expect from the listing agent. He/she represents the seller and cannot represent you, too, it is either/or in the State of Maryland.

Wouldn't you want someone to represent you the same way the listing agent is representing the seller?

So, how will a buyer's agent assist you with your Maryland home purchase?

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If you would like to get more detailed information, please keep reading. It is impossible to sum up with 2 sentences however, so please bear with me as I attempt to explain my role as a Maryland Buyer's Agent:

  1. Preparation: I like to take the time for an initial face-to-face meeting. I do believe that in order for your home buying experience to be a pleasant one, we need to "click". If all goes well I need to find out where in the process you are at:

    Do you have a loan pre-approval in hand or are recommendations for trusted loan officers needed? Do you have a clearly defined wish-list or is it still a work in progress? Do you understand the market and the home-buying process? What is your time-frame for moving? ... 

  2. Home Search: Your loan pre-approval is needed to proceed with the next step. There's nothing worse then falling in love with a house that you cannot afford. Based on your price-range and wants and needs we'll start the home search. There are several ways to go about it: you can search online and email me what you find of interest, I can set up a search and email you the listings that fit your criteria. I will schedule the showing appointments and we'll start viewing homes .. I'll point out things to you that you may miss (the water stain on the ceiling, the lack of privacy, the missing ...), we'll review what we've seen and adjust your criteria. Sometimes that process ends after just one trip and sometimes it takes several months. Sometimes it involves a reality check or fine-tuning your wish list ...

    But however short or long it takes to find your new home, I am committed to finding you the perfect match!

  3. Preparing the Offer: As soon as we have found YOUR new home, we'll get busy with all the paperwork that I gave you before for review. I will request the disclosures from the listing agent and I'll pull the comps and assist you with your offering terms. I will make sure all i-s are dotted and t-s are crossed. I will talk (again) to your lender to make sure we allow enough time for appraisal and financing contingencies. I will identify necessary addenda and prepare it for you - depending on what jurisdiction your purchasing in, what loan program you are using and what type of home and sale it is will determine which contract addenda is needed.

  4. Negotiating: It does happen that a seller will just accept the terms you proposed but more often than not, we'll be negotiating. We will discuss beforehand what, if anything, you are willing to compromise on and what your bottom-line is.

    There are different strategies depending on the house, how well it is priced, the owner, you, your motivation and wants & needs, inventory, competition and even the listing agent. Price is not the only term that can be negotiated, there are seller concessions, inclusions and time-frames .. all open to negotiations. The goal is to negotiate the terms you are most comfortable with.

  5. From Contract to Settlement: Congratulations! You are now officially under contract and it's only about 4 - 6 weeks until you will receive the keys to your new home. A lot has to happen during that time frame and it is my responsibility to make sure it all gets done by communicating with all parties involved and staying on top of deadlines, time is of the essence!

    Applicable inspections need to be scheduled and performed, the lender & Title Company will receive a copy of the contract and we will work towards removing all the contingencies:

    there is the home inspection, termite inspection, radon or mold if you opted to get them done, well inspection if applicable, there is the appraisal and financing contingency and title work, too. Repair negotiations may be necessary, an appraisal problem may present itself, there may be a defect on the title ... ideally all goes smoothly but more often then not purchasing a home may seem like climbing a tall mountain. Rest assured if obstacles do turn up I will work towards getting you passed them.

    When all contingencies have been removed and any obstacles have been mastered, we'll hear the magic words Clear to Close! and sprint to the settlement table. We'll take care of the last things that need to get done, transfer of utilities and final walk-thru for example and I will review your HUD 1. I will also attend closing with you, for moral support or in case questions arise and because I love to be the first one to welcome you home!

  6. Your trusted Realtor® for Life: Closing Days are always bittersweet! Please know that although our client-Realtor® relationship has ended, I will still be available for any questions and always love to hear from you!

Hiring your own buyer's agent has tremendous value and it all comes at no cost to you. It is customary in Maryland for the seller to offer a cooperating broker commission which is how buyer's broker & agent get compensated. At Thompson Company Realtors we also do not charge anyone a "transaction processing fee" thus your buyer representation and all that it entails is free to you. 

Are you ready to get your home buying journey started? Then give me a call and we'll schedule a meeting to enter Phase 1!

P.S. You have made it to the end of this very long blog post! Thank you very much for reading ... I look forward to hearing from you,

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