What is earnest money?

Earnest money is money paid to confirm a contract. People who make an offer on a house draw up a purchase agreement and offer earnest money. Earnest money isn’t required but it is often expected and is considered a kind of standard business practice.

The funds are usually in the form of an electronic deposit from a bank account or an old-school paper check. The funds need to be immediately available. They are deposited into a brokers trust account where they are held until the closing.

Usually, the money ends up being used to pay for the house.  If the buyer backs he/she/they may end up forfeiting the earnest money and it will go to the sellers.

There are no hard and fast rules about the amount of money a buyer should offer. Generally, $1000 dollars is a starting point for homes in St. Paul and there is no limit to how much money can be offered. I have had buyers offer $25,000 or more.

The amount of earnest money offered is usually part of the negotiating strategy. It shows the sellers that the buyer is serious. Sometimes sellers will counter an offer and ask for more earnest money. The money forces the buyers to have some skin in the game.

Once a seller accepts an offer the house is tied up for a time. Even though it is usually left on the market until inspections are completed it may be largely ignored by other buyers. Sellers want to know that the buyer will not back out.

Purchase agreements are usually structured in such a way that the buyer gets the earnest money back if he/she/they if they decide not to buy the home because of issues on the inspection or in the case of a condo if they are not comfortable with what is in the association documents and financials.

Buyers may also be able to get their earnest money back if the financing falls through. Again it depends upon how the purchase agreement is written.

Sometimes in multiple offer situations, buyers will offer more earnest money and the contract will allow the sellers to keep it if the financing falls through.

In the end earnest money usually isn’t enough to compensate sellers if the purchase falls through and they have lost time on the market.

Buyers earnest money is safe. There are numerous laws that dictate how the money is kept and accounted for. Real estate is regulated by the state. People who are buying property outside of Minnesota should consult a professional in their state.

The first full day of spring

Spring began yesterday during a snowstorm but today is the first full day of spring. I thought I would post some pictures of what we will see starting in a few weeks after we stop seeing snow. The earliest wildflowers bloom before there are leaves on the trees. There isn’t much I enjoy more than walking in the woods in the spring to hunt for wildflowers.

Happy Spring.

True but Misleading Advertising

The best apples in the world

As the spring real estate season heats up there are many real estate agents competing over few listings. Some of the agent/team/real estate company advertising is a bit misleading.

Like my graphic most everything about the advertising is true but the same claims can be made about any fresh apple. Have you ever gotten an apple with gluten in it?

Advertising that there is no obligation if we don’t sell your home makes for a nice sounding advertisement. The truth is under a standard Minnesota listing contract we don’t get paid unless the house sells and only after a successful closing.

There are agents/teams/companies that offer a free market analysis, equity position analysis or CMA. I have never heard of an agent charging a private homeowner for pricing a property.

Some are advertising that they can sell your home fast. Right now, especially in St. Paul, homes are selling very quickly and often with multiple offers.

You may read that a particular agent can get you ‘top dollar” for your home. That is a safe bet as prices continue to rise, but keep in mind that it is the buyer decides what to offer and if there is financing involved the bank will have a say too.

An agent may claim to sell more houses than anyone else. I say prove it and if I were to hire the agent I would want to know how many homes they listed that they did not sell and how many sold for less than the market value.

My claim that the apples in the picture are the best in the world is hard to prove, but also hard to disprove.

I like apples.

Most Elders do not want to move

queen anne house
Queen Anne

It is a common experience. We gradually realize that our mom or dad or both are having trouble maintaining their home.

There may be maintenance issues or maybe they are having trouble remembering to pay the bills or maybe they no longer drive and have trouble keeping the refrigerator and pantry stocked.

Sometimes they really do fall down and can not get up. We worry about them being there alone. We check on them or maybe we get them an emergency call button.

No matter how hard they struggle do not expect your elderly loved one to say that they want to move. Most do not want to move and by elderly, I mean people who are well into their 80’s.

There isn’t anyone in a memory care facility who asked to go there. Most if not all of the people who have moved to long-term care (nursing homes) did not ask to go there.

Seniors who move to assisted living often get nudges from others and sometimes it is their own idea. Almost all of the people I know who have moved to senior apartments have decided to rent instead of own and it was mostly their choice to move.

People who live in senior apartments tend to be younger and healthier than those who are in assisted living and nursing homes.

If your elder needs to move but does not want to move keep in mind that they are adults and they have the same rights that all of us have. We even have the right to make bad decisions.

We can make suggestions to our parents and we can take them on tours and show them some of the places they could be living.

We can help them get more help at home. They can have meals or groceries delivered or both. There are housekeeping services too.

We can help them keep organized with bills and paperwork and there are services that can come into the home and help sort and organize pills.

Don’t be too surprised if they are resistant to having people come into their home.

Disabilities become more common as we age and loss of mobility is one of the most common issues facing the oldest of the old.  Sometimes grab bars and a walker will work for a time.

Unfortunately, it is often hospitalization or an accident that triggers an emergency and results in a move for the elderly. I recently listened to an expert suggest that we all need to plan ahead.

That sounds good but it is almost impossible to do if we don’t know ahead of time how long we are going to live, what we are going to die of and what kind of medical care we will need during various decades of our lives.

We don’t know what medical advances will be made from one decade to the next and unfortunately, people who suffer from dementia don’t always realize it and dementia impairs their ability to make good decisions.

Do you want to move out of your home when you are old or would you rather stay there and age in place?

Don’t be surprised if you are met with resistance when trying to help an elderly parent or friend who needs to move.

Senior Real Estate Specialist

See What is a NORC

Also, see Retiring with a mortgage

See Getting mom’s house ready to sell

Coming soon home listings

I have several buyers who are looking for homes to buy. I regularly contact for sale by owners and I look for “coming soon” listings on Zillow.

I just want to say that some of those “coming soon’ listings were sold long ago. They are kept active because they can be used as bait by real estate agents.

There are also “coming soon” listings that have been coming soon for many months. Coming soon is a vague kind of thing. Soon can mean hours, days, weeks or months.Information on Zillow has gotten a lot more accurate since out MLS feeds data to the service. We are required to keep the information in our MLS up-to-date and people who put bad data in can be fined.

Agents who pay for the service can put “coming soon” homes in Zillow that are not part of the feed.

To be fair I also contact homeowners who have listed their home as for sale by owner in Zillow and have found that some of them are not serious about selling but just want to see what happens.

Most but not all of the homes listed in the MLS are really for sale but sometimes especially over the weekend we do find houses that already have offers on them but have not had their status changed.

Green weekend

It is Friday and Fridays are for fun but in this case, the fun starts tomorrow.

The 52nd Annual St. Patrick’s Day Parade will be held tomorrow starting at noon.  Because Saint Patrick’s day is tomorrow. 

It starts at Mears Park in downtown St. Paul and follows 5th street to Rice Park. It may even be warm enough so that you won’t need the bomber hat or the parka with the fur trimmed hood.

After the parade the drinking an debauchery will commence at local bars. There will be zillions of gallons of green beer and craft beer too.

Have a Happy Saint Patrick’s day and be careful out there. I’ll most likely attend the parade but will be wearing purple because I am an exception to the “everyone is a little Irish on Saint Patrick’s day” rule.

Here are some pictures from Saint Patrick’s days past:

You don’t have to look too closely to see that there is quite a temperature range. Remember to dress appropriately and make wise footwear choices.