Earnest Money is Generally Asked to be Deposited

By BYJU'S Exam Prep

Updated on: November 9th, 2023

Earnest money is generally asked to be deposited at the time of submission of a bid. The deposit made by a buyer to a seller that represents a buyer’s good faith to buy a home is called earnest money. The earnest money allows extra time for the buyer to get financing and conduct the title search, property appraisal, and inspections before closing.

Deposition of Earnest Money

It’s known as an escrow deposit, a property deposit, or goodwill money. When a buyer chooses to buy a house from a seller, a contract is signed between the two parties. The contract does not obligate the buyer to purchase the house, though. However, it guarantees that the seller will remove the house from the market. The cash gives the buyer more time to secure financing, find candidates, value the property, and conduct inspections before the deal is finalized.

Terms related to Earnest Money

The following are the essential terms that are associated with earnest money:

  • Joint Account: The account shared by two individuals is called a joint account.
  • Escrow agreement: A legal agreement that elucidates the terms and conditions applicable to the participants involved is called an escrow agreement.
  • Warranty Deed: A document that offers the buyer of property the greatest amount of insurance is known as a warranty deed.


Earnest Money is Generally Asked to be Deposited

At the time of Bid Submission the Earnest Money is Generally Asked to be Deposited. The deposit made by a buyer to a seller as a sign of their good faith in their home purchase is referred to as earnest money. When a bid is submitted, the earnest money is typically requested as a deposit. Hence, earnest money is the deposit a buyer makes with a seller to demonstrate their good faith in completing a home purchase.

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