Earnest or hand money is part of a sales agreement in the Pittsburgh Real Estate Market. Understanding its purpose and handling is sometimes confusing.
When a seller receives an offer on a Pittsburgh home, the sales agreement has a section regarding the initial deposit. This amount is what your real estate agent may refer to as earnest money or hand money.
Earnest money is just like it sounds. It means that the potential buyer is earnest in their desire to buy your home. The receipt of the earnest money is time-sensitive. The number of days can vary. Five days from the date of acceptance is the standard default.
When negotiations are complete, the buyer’s earnest money is part of the cost of buying the home. The broker holding the earnest money may be able to return it to the buyer if they decide to cancel their agreement during the contingency periods.
The earnest money will go towards a buyer’s total out-of-pocket costs that they bring to the closing table. Keep in mind that earnest money does not always lock a potential buyer into the sales agreement.
If an issue arises with the house during the home inspections, the buyer can receive their hand money back as long as it’s within the contingency period stated in the agreement of sale. In addition, there are other contingencies to protect the buyer’s interest in their hand money if the deal falls through.
The amount of hand money is negotiable. Your real estate agent will guide you on an appropriate recommendation for the Pittsburgh real estate market.
The supply and demand of the market can also impact the amount of earnest money required. It is not uncommon for a seller to request a higher amount than initially offered if multiple offers are received.
The seller does not receive the earnest money. Instead, the state regulations require the earnest money to be deposited in a non-interest-bearing escrow account until the home sale is finalized.
In some cases, the title company representative may hold the earnest money or the buyer’s broker involved in the transaction.
Hand money is the insurance that both parties will address all agreements or contingencies agreed upon. So, for example, if the buyer just decides they don’t want the home even though all his conditions or contingencies were met and breaks the deal, the seller may be entitled to keep the escrow.
The buyer and seller must agree on the release of hand money and sign a termination agreement if the transaction falls through.
To learn tips on buying your Pittsburgh home, check out this previous blog post.
I offer a free consultation for buyers and sellers. I believe a client who understands the process from the start experiences less anxiety through the process. In my 17 years of experience, I have guided many clients through the home sale process in the Pittsburgh real estate market.
Contact me by phone at 412-848-3907 or email at Kim.Esposito1@pittsburghmoves.com .com to schedule a free consultation to discuss your real estate needs.