Skip To Content

    Ask a REALTOR

    This is just a short little snippet of what that’s going to look like, but the goal is to create engagement with my community and answer your questions without any pressure, without any need to feel like you’re “calling a Realtor”. Future videos will be live videos we’ll post the schedule for that and give you all updates but this week I really just wanted to dive into a common question that I get with almost every single buyer I come across. It’s about earnest money and what it is; let’s go ahead and jump in.

    Earnest Money as defined by Forbes, earnest money is something that buyers provide so buyers provide a deposit meant to signal their intent or good faith to buy a home just pure and simple as that right that’s what earnest money is it’s it’s held by a third party and here in the state of Missouri that third party is typically a title company the title company will hold that and then at the purchase or at the closing it is applied to the purchase price at closing and so the question then comes into is what is earnest money and how will I know if I get to keep it or in the event of if we don’t make it to closing who gets that earnest money right that’s always the follow-up question what happens to that money in the state of Missouri you have to have both parties mutually agree upon where that money goes so what I will typically tell a buyer or a seller is that earnest money is just that it’s held in earnest it’s held by the third party the title company or the escrow agent as it’s listed on the contract and that money isn’t the buyers and it isn’t the sellers during the transaction right it’s the transactions money more or less and so if that transaction falls apart or doesn’t close and the buyer doesn’t get to retain that base off of those terms then you guys have to decide like i said that decision is is done through a piece of paper a form called a mutual release and it just lays out hey this money goes to this party or this money is divided up to these parties uh and it’s signed by both parties turned into the escrow agent or the title company and that money is then dispersed from there so then that leads into almost inevitably the third question which is what happens if the buyer or the seller doesn’t agree on how that money should be dispersed well that then comes the tricky part right what’s going to happen to that money and there’s there’s three pieces or three things that can happen again the money I guess for things if you all agree upon it mutual the mutual release is signed but the three other things that could happen is there’s a civil action that is filed to determine the disposition so someone else decides through that court or through that civil action the second thing is a court order or final judgment can mandate the disposition of that money and then the third thing which is just a default is the disposition happens based off of the required by law in the area so there’s time frames that come into these things and in my career I’ve never run into civil action to a court order or disposition by law but what ends up happening is the escrow holder will hold that money and they’re the way that it reads out in our contract is this it says the escrow holder is hereby authorized to report and deliver any such monies to the state treasurer at the time following 60 days after the initial projected closing date um so 60 days is the time frame in which they can 365 days is typically the date that they adhere to um so what so say for instance in today’s world you are entering into escrow you’re entering into under contract status on December 3rd or December 1st and supposed to close on December 31st well let’s say that the contract falls apart for whatever reason maybe it’s inspection related maybe it’s appraisal related maybe you were supposed to have a job transferred it didn’t go through right whatever the case may be and the contract falls apart on December 15th well on December 30th or 31st as a projected close date so 60 days after that is when the escrow holding or the escrow escrow holder which is the title company in this case can decide how that money is dispersed or that it goes back to the treasurer for the state they typically will weigh 365 days um and then it’ll go back to the state automatically or they typically just send it up now you can file there’s there’s rules of how it’s laid out and who pays for what and how that works in most cases an agreement can be reached in a couple of months if there’s a lot of tension or frustration but as a buyer in the state of Missouri there are actually multiple places within our contracts that read the earnest money the mutual release should be signed and earnest money returned to buyer right so as a buyer our contract’s really way heavier towards a buyer in our state this is this is our state specifically so I’m not talking about Kansas I’m not talking about Oklahoma I’m not talking about California I’m talking about specifically for the state of Missouri and the Missouri realtor forms that we utilize or we utilize throughout our board or our association of realtors anyways a short little a short little episode here today just about earnest money hopefully you learned something hey if you have a question regarding real estate feel free to reach out between now and the next episode i will cover it on on the next one again we’ll we’ll be hoping to go live on those so you can ask on the spot dm text email whatever modality is is preferable to you thanks again for watching hopefully you learned something this is Dustin with the Davidson Group signing off have a good day

    Trackback from your site.

    Leave a Reply