Bargaining In Good Faith!

In by-gone years, real estate buyers and sellers are said to have first "bargained" for the property in question. The process of serious negotiation was said to be bargaining in "good faith" or "in earnest". Each party sought the assurance of the other that they were sincere in their desire to buy or sell. In those days, there was little need to write down the details of the agreement since, as they said then, "A man's word is his bond". Probably no money changed hands either until the sale was consummated.

 

Later, as agreements for the sale of real estate were required to be in writing, it became common practice for the buyer to offer a quantity of money (or other valuable) as "earnest money", also known as "good faith money". It's purpose was to offer a visible sign that the buyer intended to complete the sale. The amount was usually small, but it's significance was great. It, along with the written contract it accompanied, took the place of a handshake agreement.

Today, an "earnest money" deposit placed in an escrow or trust account is commonplace. The purpose is the same, to assure the seller of the buyer's serious intent to complete the purchase. The amount of money placed as a deposit when purchasing real estate is negotiable between the buyer and seller. Most agree, however, that the larger the deposit, the more serious the buyer's intentions.

 

The idea of a deposit is to insure that the buyer fulfills his or her obligations under the agreement of sale. If a buyer willfully defaults on those obligations, the deposit may be forfeited. Most sellers require a deposit large enough to insure that the buyer will not default. From that point-of-view, sellers may look with suspicion upon buyers who refuse to provide a deposit or insist on a very small one. After all, a genuine buyer, who sincerely intends to complete a sale, has no qualms about making a substantial deposit.

 

When selling a home, ask your REALTOR for advice about the amount of deposit you should require from buyers. Remember, there is no set of rules to follow, just good common sense.

 

If you have general questions about real estate and are not currently working with another REALTOR, please call me at 260-489-7024 or outside of Fort Wayne call 1-800-395-9527.

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