The Realtor is telling us we will need to have earnest money when we write an offer to buy a house soon.The earnest money deposit is a relatively small amount of money that you usually offer in the form of a personal check at the time you make a purchase offer. Its purpose is to show the seller that you have an "earnest'" or sincere interest in purchasing their property. The amount can vary, though a minimum amount is often specified in the listing if you are purchasing a home listed for sale with a Realty company. In any case, the amount may commonly be as low as $1.000 or as high as 2% of the purchase price of the property. The amount of the earnest money deposit may be a negotiable item in the purchase contract.Once your purchase offer is written, the money is deposited in a trust account held by either a title company or in some cases in Grand Junction, in a trust account maintained by the listing real estate company. Either way, your money now becomes in effect "our money" between you and the seller. Then, at the time of closing that money is applied to your closing costs and down payment.Buyers, for obvious reasons, often like the amount to be as little as possible while sellers would like to see more earnest money to indicate a more sincere interest in the purchase. When the real estate market was hot, earnest money amounts were often more.A misconception about earnest money is that if a buyer backs out of a purchase deal, the earnest money automatically goes to the seller - not necessarily the case. Colorado law provides many protections and pain-free withdrawal opportunities for the buyer. A couple of examples include: If the buyer does not like what is found in an inspection of the property or if they request repairs the seller refuses to make, the buyer may be able to void their purchase contract and get the earnest money back. Same goes for loan conditions.In the end, earnest money is a way the buyer shows the seller that they are operating with serious intentions and in good faith.
According to data from the Grand Junction Area Realtors database, there are 65 foreclosed properties on the market today. Of those, 55 are single-family houses, seven are condos and the balance are townhouses. Prices for these properties range from a low of $33,000 to a luxury price of $660,000. Averages and medians are useful ways to look at data. Average is everything added up then divided by the total number. Median is the mid-point of a list, arranged high to low or vice versa. The average and median prices are $154,985 and $139,900 respectively. Days on market, that is the time each house has been for sale, range from 4 to 768. The average is 79 with a median of 37 days. If your curiosity about foreclosed property extends to interest in buying, take note that interest rates are still in the record low range, these house prices appear to be rock bottom and at only 37 days median market time, foreclosures are selling like proverbial hotcakes.Doug Van Etten is a local Realtor with Keller Williams Colorado West Realty. He is also founder and organizer of the Real Estate Investors Network of Western Colorado (www.REIN-WesCO.org). For information about buying or selling a home, investing in real estate or joining REIN, contact Doug at 970-433-4312 or DougVE@kw.com.