3 Tips by Red Blue Realty to Protect Earnest Money Deposits on Encino Real Estate

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Earnest money deposits are typically 1-3% of the purchase price. Red Blue Realty presents 3 ways to make sure it isn't lost.

After identifying a property in the Encino real estate market and having an offer accepted by a seller, the buyer must make what is called an “earnest money deposit.” With these 3 tips presented by Red Blue Realty, buyers can be sure that their earnest money deposits are protected.

(1) Inspection Contingency
All Encino homes for sale no matter how old or new should be inspected before it is bought. It is advisable that buyers include the inspection contingency in their contracts to avoid buying properties with serious damages. Such damages may prove quite expensive to repair turning a home into a money pit for the new occupant.

Professional inspectors should be hired especially for older homes. They should check everything from the foundation to the roof. Even where the buyer is acquiring a new house, they must ensure that everything is in working order, such as the air conditioner and heating system.

If the inspection uncovers underlying problems, buyers get the chance to decide whether to move forward, or walk away. In most cases, if a buyer decides to back out before the contingency deadline, they can receive their full deposit back.

(2) Getting written notice on loan approval and ensuring the property’s appraisal does not come in low
Buyers of Encino homes for sale should have a contingency that protects them in the event that a conditional loan approval has not been issued by the lender. Buyers who remove the financing contingency before receiving this document may find themselves unable to retrieve their earnest money deposit from the seller. Typically, a professional mortgage specialist will be able to acquire loan approval before the contingency deadline, offering the buyer security from such a tragedy.

It is wise to have the mortgage specialist and real estate agent working alongside the buyer to ensure that deadlines will be met. A buyer should never give in to pressure to remove any contingency without from proper advisement from their real estate agent and or loan officer. Buyers should never claim without documented proof that they have received an approval on a loan, in hopes that it will make their offer more enticing to the seller.

Buyers should always request an appraisal contingency with their offer. In the horrific event the property does not appraise for the agreed upon price, the buyer has the right to cancel the sale without losing their earnest money deposit. Having an appraisal contingency also gives the buyer the ability to renegotiate the terms to the agreement.

(3) Careful review of the disclosures
Sellers are required by law to reveal any known defects to the property, such as damages to the property, neighbourhood nuisances, etc. Buyers also have the responsibility to review any city or state reports on the property.

Buyers need to be very cautious when signing off on the disclosures. Each item deserves careful review and if needed, the buyers should seek professional advice from a qualified Encino real estate agent when things are unclear.

For assistance with protecting the earnest money deposit, call Christopher Rosiak at http://www.redbluerealty.com

Email: Contact(at)redbluerealty(dot)com
Phone Number: 1 - (855) 66-RBREALTY or 1- (855) 667-2732

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Christopher Rosiak
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