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What Is Earnest Money

by Real Estate ArticlesTitle Information

What is Earnest Money

Earnest money is a deposit made to a seller that represents a buyer’s good faith to buy a home. The money gives the buyer extra time to get financing and conduct the title search, property appraisal and inspections before closing. In most cases, earnest money is delivered when the sales contract or purchase agreement is signed, but it can also be attached to the offer. Once deposited, the funds are typically held in an escrow account until closing, at which time the deposit is applied to the buyer’s down payment and closing costs. 

Earnest money is also known as an escrow deposit or good faith money.

Reasons to Pay Earnest Money

When a buyer decides to purchase a home from a seller, both parties enter into a contract. The contract doesn’t obligate the buyer to purchase the home, because reports from the home appraisal and inspection may later reveal problems with the house. The contract does, however, ensure the seller takes the house off the market while it’s inspected and appraised. To prove the buyer’s offer to purchase the property is made in good faith, the buyer makes an earnest money deposit (EMD).

When Earnest Money Is Refundable

The buyer may be able to reclaim the earnest money deposit if something that was specified ahead of time in the contract goes wrong. For instance, the earnest money would be returned if the house doesn’t appraise for the sales price or the inspection reveals a serious defect – provided these contingencies are listed in the contract.

Of course, earnest money isn’t always refundable. For example, the seller gets to keep the earnest money if the buyer decides not to go through with the home purchase for contingencies not listed in the contract, or if the buyer fails to meet the timeline outlined in the contract. And, not surprisingly, the buyer will forfeit the earnest money deposit if he or she simply has a change of heart and decides not to buy. 

Earnest money is always returned to the buyer if the seller terminates the deal.

How Much You Pay in Earnest Money

While the buyer and seller can negotiate the earnest money deposit, it often ranges between 1% and 2% of the home’s purchase price, depending on the market. If a home costs $250,000, a 1% earnest money deposit would be $2,500; at 2%, the deposit would be $5,000.

In addition to the local market rates, the size of the earnest money deposit depends on the level of interest other buyers have expressed, how hot the housing market is and how quickly a prospective buyer can close on his or her offering price. In hot housing markets, the earnest money deposit might range between 5% and 10% of a property’s sale price.

While the earnest money deposit is often a percentage of the sales price, some sellers prefer a fixed amount, such as $5,000 or $10,000. Of course, the higher the earnest money, the more serious the seller is likely to consider the buyer. Therefore, a buyer should offer a high enough earnest deposit to be accepted, but not so high as to put extra money at risk since there’s still a chance that the deal might not go through and the deposit not refunded.

Earnest money is usually paid by certified check, personal check or a wire transfer into a trust or escrow account that is held by a real estate brokerage, legal firm or title company. The funds are held in the account until closing, when they are applied toward the buyer’s down payment and closing costs. It’s important to note that escrow accounts, like any other bank account, can earn interest. Therefore, if the earnest funds in the escrow account earn interest of more than $5,000, the buyer must fill out tax form W-9 with the IRS to receive the interest.

Protecting Your Earnest Money Deposit

Prospective buyers can do several things to protect their earnest money deposits.

  • Make sure contingencies for financing and inspections are included in the contract. Without these, the deposit could be forfeited if the buyer can’t get financing or a serious defect is found during the inspection. 
  • Read, understand and abide by the terms of the contract. For example, if the contract states the home inspection must be completed by a certain date, the buyer must meet that deadline, or risk losing the deposit – and the house.
  • Make sure the deposit is handled appropriately. The deposit should be payable to a reputable third party, such as a well-known real estate brokerage, escrow company, title company or legal firm (never give the deposit directly to the seller). Buyers should verify the funds will be held in an escrow account and always obtain a receipt. 

Source: https://www.investopedia.com/terms/e/earnest-money.asp

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Bucket List – Top Things Every Traveling Texan Should Do!

by Resources

• Pull off a Schlitterbahn four-bagger Texas’ beloved waterpark has four locations: Corpus Christi, Galveston, New Braunfels, and South Padre. Hit all of them and be forever named the “Sultan of Schlitterbahn.”
www.schlitterbahn.com

• Visit Blue Bell Visit the creamery in Brenham, Texas! Stop by for a scoop of ice cream at the Ice Cream Parlor, view how we make ice cream from the Observation Deck & shop in the Country Store.
www.bluebell.com

• Kayak Caddo Lake Kayak through the sprawling labyrinth of lush bayous and wetlands, using the thick cypress trees cased in Spanish moss as a sort of lakeside slalom.
tpwd.texas.gov/state-parks/caddo-lake

• Mountain-bike Through Palo Duro Canyon At 120 miles long, 20 miles wide, and 800ft deep, it’s the second-largest canyon in the United States — but it’s only visited by around 300,000 people per year (by comparison, the Grand Canyon gets over 5 million).
www.palodurocanyon.com

• Camp Out At Enchanted Rock The nation’s second-largest granite dome is one of the choicest spots to catch those big and bright Texas stars.
tpwd.texas.gov/state-parks/enchanted-rock

• Cliff Jump Into Jacob’s Well Ever seek the thrill of diving headfirst into a 140 ft. natural artesian spring with an extremely dangerous limestone cave below it?
www.visitwimberley.com/jacobswell

• Channel Indiana Jones Texas has plenty of amazing caves, some of which lie just west of the small city of Sonora (which, FYI, is about halfway between San Antonio and Big Bend).
www.cavernsofsonora.com

• Hike Your Way To Gorman Falls We don’t even know why you’d visit Colorado Bend State Park without hiking the 1.5-mile trail to this hidden treasure. Afterward, you’ll be treated to a misty chill and a breathtaking 60ft waterfall cascading into a fern-coated grotto.
tpwd.texas.gov/state-parks/colorado-bend

• Do The River Walk Walk, shop, dine, and enjoy the hospitality of our world-renowned urban waterway. Hop aboard a river taxi and discover for yourself why millions visit every year.
www.thesanantonioriverwalk.com

• Cruise Along Route 66 The Texas slice of the legendary Route 66 is 178 miles of ramshackle ghost towns and mighty fine roadside attractions, including Amarillo’s offbeat but totally rad Cadillac Ranch and McLean’s tribute to barbed wire, the Devil’s Rope Museum.
www.barbwiremuseum.com

• Salute The Texas State Capitol Take a guided tour of the 19th-century building… or just take a selfie in front of it.
www.tspb.texas.gov

• Drink Your Way Through The Best Breweries Sip fine craft suds at all 10, then finish with a stop at Spoetzl Brewery. The magical land that pumps out each and every can and bottle of Shiner also happens to be the oldest brewery in the state.
www.shiner.com/brewery/spoetzl-brewery

• Live That Astronaut Life The Lyndon B. Johnson Space Center is home to a bunch of great experiences, from International Space Station mission operations to astronaut ice cream. If you take the threehour tram tour (YOLO!), you can even get a peek at the historic mission control room.
spacecenter.org

• Wineries In Fredericksburg The Texas Hill Country is home to over 45 wineries and vineyards and Fredericksburg is the epicenter of the Hill Country wine region.
www.visitfredericksburgtx.com

• Conquer “The Texan King”  The iconic Big Texan Steak Ranch harbors the opportunity of a lifetime, and that is the chance to tackle and defeat a colossal, 72oz hunk of Texas beef.
bigtexan.com

• Trip Out In Marfa Experience hyper-reality in this offbeat West Texas town, where you’ll find a minimalistic Prada art installation in the middle of the desert, and mystery lights that have gone unexplained for over half a century.
www.atlasobscura.com/places/prada-marfa

• See The Best Star Show In The State The McDonald Observatory in Davis Mountains State Park hosts “Star Parties,” where you can look through a bunch of telescopes (including the biggest in Texas) to see night sky constellation tours and views of celestial objects.
mcdonaldobservatory.org

• Eat Deep-fried Everything At The State Fair We’re talking things like America’s original Corny Dog, chicken-fried lobster with Champagne gravy, funnel cake, bacon cinnamon rolls, and deep-fried BEER.
www.bigtex.com/

 

Source: thrillist.com

Hooded hacker. Cyber attack concept.

Spam Calls From International Phone Numbers

by Cyber Security

Have you been receiving phone calls from unknown callers (mainly from Sierra Leone)?  Well, you are not alone.  These are scam calls.

The FCC advises the following:

  • Do not call back numbers you do not recognize, especially those appearing to originate overseas.
  • File a complaint with the FCC if you received these calls: fcc.gov/complaints
  • If you never make international calls, consider talking to your phone company about blocking outbound international calls to prevent accidental toll calls.
  • Check your phone bill for charges you don’t recognize.

For additional details review the links below:

https://docs.fcc.gov/public/attachments/DOC-357304A1.pdf

http://www.fox4news.com/news/officials-beware-sierra-leone-one-ring-robocallers

https://www.nbcdfw.com/news/local/Dont-Call-Back-FCC-Warns-of-West-African-One-Ring-Phone-Scam-509588711.html

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10 Ways to Live More Eco-Friendly

by Resources

Here are just a few ways to live more eco-friendly:

  • Shop local. Purchasing local products offers an impressive way of reducing pollution that results from supply chain logistics.
  • Opt for natural and organic beauty products. There are many items you already have in your kitchen that you can use for organic beauty products.  It will keep your skin and the environment happy.
  • There are other items around the home that can be recycled outside of kitchen paper and plastics such as unused electronics, old books, and clothes.
  • Avoid drinking bottled water. Plastic waste hurts the environment significantly.
  • Personalize gift wrapping. Creatively re-using wrapping, tags and bows can offer cheap ways for saving the world’s trees.
  • Switch to a bike when you can. It can save you money and help you stay in shape.
  • Always have reusable bags on hand for unplanned shopping. Plastic bags are among the largest contributors to landfills worldwide.
  • Use energy efficient light bulbs to reduce waste and save money.
  • Eat Local! Buy locally grown food and eat out at locally sourced restaurants.
  • Invest in a smart home device that automatically adjusts your thermostat when you are not home, and tracks your usage to help save you money and reduces energy use.
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Spring Maintenance Checklist

by Resources

Once the ground has thawed and the trees begin to bud, it’s time to prepare your home for spring. On top of your regular spring cleaning, you’ll also want to consider these general home maintenance tips. Use our spring home maintenance checklist to make sure everything in your home from the basement to the roof is in tip-top shape.

• Inspect roofing for missing, loose, or damaged shingles and leaks.
• Change the air-conditioner filter.
• Clean window and door screens.
• Polish wood furniture, and dust light fixtures.
• Refinish the deck.
• Power-wash windows and siding.
• Remove leaves and debris from gutters and downspouts.
• Replace the batteries in smoke and carbon monoxide detectors.
• Have a professional inspect and pump the septic tank.
• Inspect sink, shower, and bath caulking for deterioration.
• Vacuum lint from dryer vent.
• Inspect chimney for damage.
• Repair or replace caulking and weather stripping around windows, doors, and mechanicals.
• Remove insulation from outdoor faucets and check sprinkler heads.
• Have air-conditioning system serviced.
• Drain or flush water heater.
• Fertilize your lawn.

source: www.bhg.com

 

Miracle_morning

Win the Day, Win the Business

by Resources

You probably know at least five people in your sphere of influence, circle of friends or in your office that you are a little jealous of, right? It seems like they have it all…they enjoy success in every aspect of their lives, from their careers to their relationships and even their level of creature comforts. We all do and we wonder…how do they do it?

Darren Hardy, former publisher of Success Magazine and New York Times best-selling author, says “You will never change your life until you change something you do daily. The secret of your success is found in your daily routine.”

As a self-proclaimed sales and personal development junkie, the most important lesson of all came to me through a book called The Miracle Morning by Hal Elrod. Republic Title sponsored a lecture by him in January of this year. Since reading that book and others by modern thought leaders and motivational gurus, the ONE thing they all do and advise us to do is to have a morning routine. It is a secret weapon to winning the day and, after practicing one for the past three years, I can tell you…it works.

This may be yours: wake up, make and have some coffee, check the phone, maybe read or watch some news, take a shower, have a quick bite and then out the door. While this is more than likely close to everyone’s habit, this is NOT a morning routine. This is the day taking you for a ride, not you taking the day. All of the pros say that a morning routine should consist of at least three action items. By the way, NONE of them involve your smart phone or television.

Hal Elrod practices and writes about Life S.A.V.E.R.S, which include meditation, affirmations, visualization, reading and journaling. Brendon Burchard practices a Power Hour that includes twenty minutes of exercise, journaling and reading each. Mel Robbins has her own too that includes much of the same.

No matter HOW you do it…just DO IT. You can find a morning routine that is the perfect fit for you by searching Google or any of the people above.

And remember, the modern world we live in is filled with more distractions than we can count. Everywhere we go, our attention is being vied for by something. Technology was created to be a tool for better living, and while our constantly evolving “smart” devices are not the enemy, we must realize that they cannot and should not rule our day, much less our life. It is imperative that we remember the ONE thing that we are in control of…OUR MORNINGS.

Win the Day!

Janet Allen, Senior Vice President/Residential Business Development, Republic Title

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Survey Deletion Coverage Q&A

by Real Estate ArticlesTitle Information

What is Survey Deletion Coverage?

Survey Deletion Coverage is often also referred to as “Survey Deletion”, “Survey Amendment”, and “Survey Coverage.”  When survey deletion coverage is given in the title policy it offers Buyers protection for errors or omissions that may have been made by the surveyor and accepted by the title company by changing the language in the “standard exception” of the title policy to read “Shortages in Area” only.  The “standard survey exception” in a title commitment or policy (before being amended) reads:

“Any discrepancies, conflicts, or shortage in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements.”

 Upon receipt of an acceptable survey, the title company may amend this exception to read “Shortages in area” only.   Things that a title company will look at to determine if a survey will be acceptable include, but are not limited to, the following:  that items noted on the survey are listed in the title commitment, verify the legal description, check platted building lines and platted easements, and other matters such as the seal and signature of the engineer, date of the survey, and north directional arrow. 

Survey Deletion is addressed in paragraph 6. A. (8) of the TREC One to Four Family Residential Contract, where the parties select between the options of amending or not amending the standard exception in the title policy and who will be responsible for the payment of the premium.

There are other issues that may show up in the review of a survey, such as a building or driveway or fence over a building line, or into a platted easement.  When this happens, the title company may still accept the survey and amend the standard exception to read “Shortages in Area” only, but will generally add a special exception on Schedule B of the title commitment and owner’s title policy for any of these issues that were shown on the survey.              

The cost of survey deletion coverage on residential transactions is 5% of the Owners Title Policy Premium, and is 15% of the Owner Title Policy Premium in a commercial transaction.

For more information on Survey Deletion Coverage, download our Survey Deletion Coverage Q&A flyer