The essential elements necessary to form a binding contract are usually described as:
1. An Offer
2. An Acceptance in strict compliance with the terms of the offer
3. Legal Purpose/Objective
4. Mutuality of Obligation â€“ also known as the â€œmeeting of the mindsâ€
6. Competent Parties
Consideration is an essential element of any valid contracti Consideration consists of either a benefit to the promisor or a detriment to the promisee. It is a present exchange bargained for in return for a promise. It may consist of some right, interest, profit, or benefit that accrues to one party, or alternatively, of some forbearance, loss or responsibility that is undertaken or incurred by the other party. It is not necessary for a contract to be supported by a monetary consideration.
Don't be afraid to put down money, your Realtor should tell you how much and if it is refundable if the deal doesn't go through.
During the option period if you terminate it's automatic refund of earnest money. After that it gets a little more complicated and your agent can explain it all to you.
This question is too general. You have better to provide more details or narrow it. Otherwise, you may just get some general answers only.
In real estate as in just about everything else when it comes to dealing with people, it's alway a good rule to follow... Treat others as if you would like to be treated. I like to think that way, and I think most everyone does as well.
Hope this helps, and best wishes to you.
Should you offer earnest money? That depends on the seller's motivation. I purchased 3 homes last year and one so far this year and I didn't receipt earnest money on any of them. Clearly those sellers took me serious.
I will say that if an agent has listed the home that you wish to purchase, your chances of convincing the seller's agent of your seriousness (regardless of earnest money) may be difficult. I don't typically buy homes where agents are involved as our industry is not known for thinking left or right of what the way they've always done things and ultimately hampers the process. If the home you wish to purchase is not listed with a brokerage, your chances are much greater for receipting a contract without earnest money. Not offering earnest money has become my standard operating procedure these days and the seller's I purchase from don't even balk about it.
While not offering up earnest money may not be the norm for most real estate transactions, you might just be surprised at what a motivated seller will do. You'll NEVER get what you want if you don't ask for it.
Without a serious offer including earnest money I would find it hard for me to recommend to my client to take their home off the market. If you are not ready to put up earnest money you are not really ready to make an offer. I would find a knowledgeable agent in your area and let them explain the process in greater detail to you. It's important that you understand the process and how things transpire.
Good luck to you.
I doubt you will find someone willing to do this, however. In Texas Real Estate, the customary earnest money is 1% of the contract price. (If your offer is 100k, then the customary earnest money deposit is 1%, or $1,000). It is important to note that when the contract goes to closing, earnest money is considered a part of your down payment, so it is not lost.
The reasoning behind this is to show that you are a serious buyer. If you were to back out of the contract for a reason that was not explicitly stated in the contract, then you forfeit that money as consideration for the seller's time and marketability of the home. If you only put up $1 or even $100 on a $100k home, then what makes a seller think that you are serious about buying their home? In addition to this, it will make the seller think "If this person doesn't have $1000 to put down as earnest money, do they really have enough for the down payment? Can they really afford this home? Is it worth my time to take my home off the market to deal with this contract if they aren't serious enough to put up 1%?"
There are always exceptions to the norm though, and that would be something to discuss with your real estate agent.
Because it's more than real estate. It's RAYL-Estate!
Brian Rayl, REALTORÂ®, e-PRO
Keller Williams Elite - Dallas Park Cities
In most cases that would be money.
On normal real estate transactions you will put up option and earnest money.
Option money is non-refundable. Earnest money is your "I'm serious" about buying the property money.
This may or may not be refundable depending on at what point you either finish or terminate the contract.
Hope this helps!
I have been told that for the contract to be binding there must be "consideration" in the form of earnest money. That could be $1 if the parties agree to it. The option fee, as previously noted, would only be required if the buyer wanted and the seller granted an option. In this case, some form of consideration would be requiredas well as agreed by the parties.
On the other hand, I also understand that a contract is not necessary to purchase. In that case the "binding" part wouldn't matter. I guess one of the parties would just tell the title company how to set up the closing and as long as the other party agreed, everyone could sign. Of course if there were a lender, they might not be to wild about that and the buyer and/or seller might be out some expenses only to find out that they couldn't agree about how the closing was to be handled.
Were it me, I'd talk with my attorney before betting on any of this!
In Texas earnest money is typically due when all parties have come to an agreement and the contract is executed. An option fee is due if you and the seller agree to an option period. Downpayment is due at closing. You need to ask your agent to explain each of these!