Once you’ve found your dream downtown Boston condo for sale, you need to show the seller that you’re serious about buying it. This will assure them that they can safely take their Seaport or Beacon Hill condo off the market and sell it to you. This is achieved through an earnest money deposit.
When you make an offer on Boston real estate for sale you want the seller to take their property off the market. This isn’t without risk for the seller, and to show you are serious about the purchase, a good faith condo deposit is required.
In downtown Boston a $1,000.00 deposit will be placed into an escrow account which protects the buyer that no more offers will be submitted above theirs, it also helps the seller should the buyer walk away from the deal after taking it off the market. The deposit will then be used as part of the closing costs or down payment when the purchase successfully closes.
In the Boston real estate market, an earnest money deposit will be preferred by the seller to protect them, as well as adding some security for the buyer.
Since this is money that will go to your home buying expenses anyway, there isn’t really a huge downside to it. Though it does mean finding some of the money earlier than you would otherwise need to.
When making an offer on a Boston condo, there are clauses to let you walk away from the contract with your deposit returned. These common real estate contingencies will ensure certain things happen in the buying process, protecting the buyer if they don’t.
Quite often, buyers and sellers ask who gets to keep the earnest money deposit. The answer depends on who didn’t follow the contract properly.
- Home inspections
- Mortgage contingency
- Real Estate Appraisal
- Home sale contingency
These are the most typical contingencies that could allow for the return of your home deposit. Let’s take a careful review of each of them.
A home inspection is one of the most vital aspects of purchasing a Boston real estate for sale. When you are buying a home for the first time, you want to ensure you’re not buying a lemon. If you made an offer and then found there were significant structural problems, you would be in trouble without a home inspection contingency.
This allows you to have a home inspector check the property, and if there are serious concerns discovered, you have the option of walking away without losing your deposit.
Even if you are preapproved for a mortgage when you make an offer, you could still have problems getting a loan from your lender when you need it. A financing contingency protects your earnest money should you not be able to get the loan you need to purchase.
An appraisal contingency will come into effect should the home be appraised lower than the offer amount. In such a circumstance, you would have to make up the difference, and this could make it impossible to continue with the purchase.
The lender will hire an appraiser to find the fair market value of the home. If it doesn’t reach the offer price, you can walk away from the purchase with your earnest money.
If you need to wait for your existing home to sell before you can purchase, the selling contingency will protect your deposit. If your current home doesn’t sell, you can recover your earnest money and move on.
When there are many potential buyers, you can be put under pressure to reduce the contingencies on your offer. This will help the speed of the purchasing process and may convince the seller to go with your offer. However, this could leave you in a difficult position if things don’t go to plan.
It may be possible to waive a financial contingency if you’re confident your loan will be approved, though others could be riskier.
Hopefully, you know have a much better understanding of the next few steps when purchasing a Boston condo for sale. At some point will go through the remaining steps in purchasing Boston real estate for sale.