|Updated: 4/13/2007 9:48 am
||Published: 4/13/2007 9:48 am
When a buyer makes an offer to purchase a home, he or she usually pays a deposit to the seller indicating his or her ability to carry out the terms of the contract. This deposit is called 'earnest money.' If the contract is fulfilled, the earnest money is applied to the selling price. Real estate licensing laws are specific about the handling of these funds. They must be deposited into a broker's trust account. Default by the buyer on the contract may result in the earnest money being paid to the seller as damages. Because of this, you should carefully understand how the disposition of earnest money will affect your efforts to buy a home. For more information on disposition of earnest money, contact a real estate professional.