As a homebuyer, once you go under contract with a home, you must present a check for earnest money. This is a “good faith” deposit to the home which upon closing you may use towards your downpayment. The amount of earnest money that is owed is dictated by the seller but it is typically between 1-3% of the purchase price of the home. The earnest money is held in an escrow account by a real estate company or a title company until closing.
In Colorado, there are a few items that are negotiable regarding earnest money. The dollar amount of the earnest money is negotiable. In Denver’s current seller’s market, putting in more money for earnest money is a great way to make your deal look stronger. Additionally, the deadline for when earnest money needs to be presented is negotiable. Typically a buyer delivers earnest money within one to three business days within going under contract.
Upon completing your due diligence on the home, such as title commitment, inspection, appraisal, a homebuyer may terminate the contract is it is not suitable. It is important to know that the Colorado Contract to Buy and Sell Real Estate allows you to receive your deposit back. The seller has three days to release the funds back to the buyer.
Liz works full-time as a Real Estate Agent with LUX. Denver
