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Homes and Land in Sunny Sequim, Washington

Homes and Land in Sunny Sequim, Washington

Sequim's No.1 Buyer's Agent Where Knowledge & Experience Count.

(360) 775-5424
Email: ChuckMarunde@gmail.com

iRealty Virtual Brokers, aka Sequim & Port Angeles Real Estate
125 Olympic Ranch Ln, Sequim, WA 98382

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Earnest Money: How Does It Work?

by Chuck Marunde / Monday, 22 June 2009 / Published in Buyer's Agent

When you write an offer on a house in Sequim or Port Angeles, you’ll have to write a check for the earnest money.   The earnest money is what makes the contract a legal offer that can become a binding contract.   In contract law there must be consideration, and the buyer provides that consideration with earnest money.   The seller’s consideration is the promise to sell you his house at the agreed price.

How much should earnest money be? There is no rule, just guidelines.   The more expensive the home, the more the earnest money should be.   I’ve seen earnest money for as little as $100 and as much as $10,000.   It is common to see earnest money checks in the amount of $2,000 for a house priced at $200,000 and up, but it is also common to see earnest money of $5,000 for more expensive homes, especially in these uncertain times where financing can be questionable.   If a buyer is serious and can afford to purchase a $350,000 or $750,000 home, he or she can write a check for $2,000 to $5,000.

The earnest money check is not even deposited until there is mutual acceptance on the price and all the terms.   Once that happens, the final contract and the earnest money check are given to the escrow company, and they deposit the check.   Most real estate brokers, including me, don’t keep a trust account for that purpose as the regulatory requirements have gotten far too cumbersome.   Escrow companies have trust accounts and are set up to account for all the debits and credits on the HUD-1 settlement statement.

What happens if you reach mutual acceptance, give the escrow company the contract and they deposit the earnest money, but subsequently a contingency is not met (like you don’t qualify for your loan)?   How do you get your earnest money back?

Your buyer’s agent must draft a termination of the transaction and release of the earnest money, and the seller must sign that agreement.   While this is not required by law, the escrow companies all insist that they have a signed release from both buyer and seller. You can imagine that if the sellers refuse to sign the release, the escrow company will not release the funds to you.   In that case, after 14 days, the escrow company must tender the money to the superior court, and you either walk away from your earnest money or you hire an attorney and sue the seller for the return of your earnest money.

The reality is that most sellers are going to sign the release.   They realize that if you did not get your loan, or could not satisfy some other contingency, you are entitled to the earnest money, and the vast majority of sellers gladly cooperate and move on.

I recommend you hire an experienced Buyer’s Agent to watch your backside when it’s time to make an offer on a home.   We live in challenging times, and it’s easy to get in trouble these days without even trying.   May I suggest you hire me as your Buyer’s Agent?   I’d love to work with you to find your perfect retirement home.

Chuck Marunde (retired real estate attorney and now Sequim buyer’s agent)
360-775-5424

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About Chuck Marunde

After practicing real estate law for 20 years in Washington, Chuck opened iRealty Virtual Brokers covering the Sequim and the beautiful Olympic Peninsula. Chuck is the author of numerous magazine and Internet articles with a primary focus on real estate. He is also the author of over a dozen books, mostly about Sequim real estate. Chuck is a photographer, videographer, and Registered FAA Drone Pilot. Chuck has combined his love for real estate and technology to create a growing Internet presence in his market, and enjoys building his websites and blogs, including SequimBlog.com and Sequim4Sale.com and LuxuryWaterViewHomes.com. Chuck has degrees in Economics, Law, and Education.

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Chuck E. Marunde, J.D.

Sequim Buyer's Agent
(Atty Ret.)
Founder and Broker of
Sequim & Port Angeles Real Estate dba iRealty Virtual Brokers
125 Olympic Ranch Ln,
Sequim, WA 98382
(360) 775-5424
ChuckMarunde@gmail.com

Blog Articles by Date

From Los Angeles

It's rare, but once in awhile life provides the perfect collaborator for an important endeavor such as buying your new home. For me that person was Chuck Marunde. His two decade background as a Real Estate Attorney, his prolific career as an author of articles and books on Real Estate and his forthright and moral character made choosing Chuck a no-brainer. Chuck is dedicated, thorough, incredible at the negotiating table, knowledgeable about all local laws & regs but, most importantly, Chuck loves what he does. And what he does is find his client the perfect property. Chuck isn't about making the sale, he's about making the sale that is OPTIMUM for his CLIENT and this makes Chuck a rare bird indeed. I love my new home in Sequim and I am indebted to Chuck for making it happen. Kevin E.

From Seattle

I’ve had the pleasure of working with Chuck over the past three years in selling my parent's estate. It was a tough time to sell during the housing recession, but Chuck always kept things on the positive side. With his real estate law background, he offers sound, practical advice. He helps you along with the process using discussions and reason, rather than opinions and speculations. If Chuck doesn’t know the answers, he will get them for you. In several instances, Chuck took the initiative to meet with county officials to get up-to-date facts about zoning and regulations. I was always impressed with his company’s tech savvy communi-cations and internet presence: weekly email updates, blogs, videos, links, Linked-in networking, etc. He is truly pioneering the future of buying & selling real estate. Brian M.

From California

"Andy Romano is a successful motion picture character actor with over 40 years in 'the Biz.' Mr. Romano has a home in beautiful Santa Barbara, California, but he chooses to live most of the time in Sequim, Washington on the Olympic Peninsula in the great Pacific Northwest. Why? In his own words, 'Because it's even more beautiful and surrounded by more beauty in this incredibly peaceful and quiet place. With respect to real estate agents or brokers, well my friend Chuck Marunde, owner of Sequim and Port Angeles Real Estate, is hands down the best there" Andy R.

Intro by Chuck Marunde

From Florida

We do our homework for the task at hand and we look for and expect to enlist partners that do the same. It was our good fortune to select Chuck Marunde of Sequim and Port Angeles Real Estate to represent us as a buyer's broker in our search for a home in the Sequim/Port Angeles area. Chuck's site is all encompassing and super fast compared to many others, he knows the market at every conceivable level and his guidance through the process of selecting and purchasing a home is priceless - above and beyond that of anyone with whom we have ever worked. Add to all this his 20 year background in real estate law and you have discovered a superb asset in the adventure of purchasing a home. Greg and Marilyn

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