When you're building your offer for a property, don't overlook the non-monetary parts of the deal. When used correctly, they can protect you from uncertainty and make your offer stronger in the eyes of the seller.
EARNEST MONEY DEPOSIT
Part of your offer should specify your Earnest Money Deposit (or EMD), which is typically 1-3% of the offer price. This deposit helps prove that you are serious about actually buying the property, and gives the seller some insurance that you will complete the transaction.
Your Agent should never let you be in a situation where you surrender your EMD for a breach of contract while not moving forward with the property. The contingencies we cover below should give you ways out of the contract if you act before their deadlines.
It's good practice to specify that your Agent's broker holds the funds, in the event of a dispute. Be prepared with a cashier's check, as most brokers won't allow you to pay with a personal check.
Contingencies are clauses you write into your Purchase & Sale agreement that let you back out of a contract if certain things happen. They can help protect your Earnest Money Deposit while allowing you to get written assurance that certain items will be fixed.
Mortgage / Financing – Your financing must make it through underwriting. (These are important
Appraisal – The property must appraise at or above the offer amount.
Inspection – The property must pass all inspections specified. (Home, Termite, etc.)
Property Sale – Your current property must sell to complete the contract.