When someone wants to buy a house or property, they often have to show the seller that they're serious about buying it. One way to do that is by giving the seller some money upfront. This money is called "earnest money."

Here's how it works:

The buyer submits a certain amount of money in U.S. Dollars as earnest money to the seller. This amount is typically 1% of the purchase price or more. This money shows the seller that the buyer is committed to buying the property.

The buyer should give the earnest money along with the purchase agreement, which is a document that outlines the terms of the sale. But if the buyer doesn't give the money with the purchase agreement, they have to give it to a third party called the "Escrow Agent" within a specific number of hours or days after the seller accepts the buyer's offer.

The Escrow Agent is a person or company who is trusted to hold the earnest money until the sale is finalized or the agreement is canceled. In this case, the Escrow Agent could be the real estate broker representing the seller, the real estate broker representing the buyer, or some other trusted party.

Once the Escrow Agent receives the earnest money, they have to deposit it into a special bank account called an "escrow account." They keep the money in this account until the sale is completed or if the agreement is canceled.

If the buyer's offer is not accepted by the seller, the Escrow Agent will return the earnest money to the buyer promptly.

However, if the buyer doesn't give the earnest money to the Escrow Agent on time, the seller has the right to cancel the agreement. The seller can do this by sending a notice of termination to the buyer before the Escrow Agent receives the earnest money.

So, in simple terms, the buyer needs to give some money upfront to show they're serious about buying the property. They have to give it to a trusted person or company, like a real estate broker, who will hold the money until the sale is complete or canceled. If the buyer doesn't give the money on time, the seller can cancel the agreement.

When you meet with our team to talk about selling or buying a home, you will feel confident with the information given to you in order to make the best decision. Thank you for the kind words, Bart!

"Tim and his entire team did an excellent job marketing and selling our house. We chose Tim Murray because of all the realtors we had met the previous year, he was the only realtor that took the extra step and contacted us. And when he did, it was an enjoyable experience where we didn't feel any pressure, yet it was evident Tim would provide the service and professionalism we desired. Tim and his team did not disappoint. We would definitely use him again to buy and sell our home. We highly recommend Tim Murray and his entire team."

If you’re planning to buy a home, an inspection is an important step in the process. It assesses the condition of the home before you finalize the transaction. It’s also a different step in the process from an appraisal, which is a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. Here’s the breakdown of each one and why they’re both important when buying a home.

Home Inspection

Here’s the key difference between an inspection and an appraisal. Bankrate says:

“In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.

Home Appraisal

The National Association of Realtors (NAR) explains:

“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.

This is especially critical in a sellers’ market where low inventory drives an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.

However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.

Bottom Line

The inspection and the appraisal are critical steps when buying a home, and you don’t need to manage them by yourself. Work with a real estate professional today so you have the expert guidance you need to navigate the entire homebuying process.

Judy bought a new construction home with us in 2023. We are so happy we made it an easy process.

I am so thrilled with everything.  It was such a good experience from start to finish. You have a great team. Thank you for all of your help. Judy Pitt

My best decision this year besides buying this house was contacting Tim Murray at Coldwell Bankers to help me buy our first home. Tim is absolutely wonderful to work with. It’s like having a friend on the “inside” that is working for you. He really cares about his clients as well as the community. And the good news doesn’t end here, Tim has a great team working with him especially his assistant, Kim Boisvert. She is the best! She is thorough and professional and a great person to work with. She kept us apprised about our next appointments and always let us know as soon as there is something that needs to be addressed or done. She is honest and forthright-no games.

Tim and Kim are a fabulous team with selling and buying. They responded fast all the time and got the best price for our first home!

50213 Linnwood Dr, Elkhart, IN

3 bedrooms, 2 baths

NEARLY NEW! This two-year new home is tucked away in North Shore Landings community- across the street from Simonton Lake and minutes from Michigan and the toll road! Neighborhood features sidewalks, streetlights, city sewer and well, low Osolo township taxes, protective restrictions. This ranch has an open concept floor plan with 3 bedrooms, 2 baths with 9-foot ceilings and vaulted ceiling in the living room. Split bedroom concept allows for more privacy for the Master Suite. Kitchen has granite counter tops, upgraded kitchen cabinetry, black stainless steel appliances, walk-in pantry with automatic lighting, and island with seating. Dining area opens to the covered back patio and living room with fireplace. Master Suite features dual closets, double sink vanity, and stand-up shower. Main floor laundry, additional full bath w/ tub/shower combo. Full basement has great space for future finished living space. Association provides two options either (amounts for 2022) (1) $250 per year or (2) $425 per quarter which includes lawn mowing and snow plowing. Call now to see this home. Sewer provided by Simonton Lake Sewer District.

Listed by: Tim Murray, Coldwell Banker Real Estate Group

1123 N Lawrence St, South Bend

4 bedrooms, 3.5 baths

NEW CONSTRUCTION Home to be built by Devine Homes by Miller within 1/2 mile of Notre Dame. Enjoy the luxury of a new home in a charming, older neighborhood close to campus, Eddy Street Commons, downtown, and Trader Joe's. This craftsman style home will be built among other new homes for beautiful curb appeal - enhanced by a rear-loading garage and covered front porch. The open and spacious main living space includes a great room with 9' ceilings; dining area, living room with gas fireplace and stone surround; guest bath; and a gourmet kitchen with large island, quartz counters, stainless appliances, tile backsplash, and pantry. Great space for entertaining! Upstairs, you'll find the owner's suite with walk-in closet, en suite bath with tile shower. 2 additional bedrooms share a full bath with tile tub surround. Finished lower level has the 4th bedroom, full bath, and large rec room - even more living space for your get togethers! Landscape package includes sodded front yard and irrigation system. Purchase this home before construction to make your own finish selections. Devine Homes by Miller has a reputation for beautiful homes and would love to make this one yours! City water/sewer.

15074 Woodford Trails, Granger, IN 46530

This new home in Woodford Trails by Devine Homes by Miller isn't just a new home; it's a LIFESTYLE. Thoughtfully and uniquely designed for living big in the lap of luxury, this WATERFRONT Craftsman style ranch is set to impress with a stone arch porch entrance, 3-car side-load garage, LP Smartside siding, and an amazing LAKE lot (one of the best lots in the neighborhood) on Bantam Lake. This private lot features sprawling views of the lake and woods for true relaxation. Over $20,000 in technology upgrades including Sonos sound system, whole home wifi with boosters, wifi thermostat, and electric vehicle plugs in the garage. Step inside to engineered hardwood flooring throughout the entire main floor (tile bathroom floors). Soaring 11' ceilings grace the great room with custom beam details, gas fireplace, and extensive windows overlooking the lake. Great spaces for formal dining and a gathering nook that leads to the covered composite deck with TV mount. Gourmet kitchen with 9' island, quartz counters, double oven, custom cabinets and appliances, display cabinets, and a FEATURE hidden butler's pantry. 2 bedrooms share the east wing of the home, both featuring WALK-IN closets and sharing a Jack 'n' Jill bath with double vanity, tile floors, and quartz counters. The west wing features a powder room, pocket office, laundry room/mudroom with custom built-ins, and the SPA-LIKE MASTER SUITE. Your own private oasis awaits in your bedroom featuring custom beam ceiling features, frosted glass doors leading to the stunning en suite bath with heated tile floors, soaking tub, walk-in tile shower, double quartz vanities, and huge walk-in closet. The daylight lower level is plumbed for a bath and ready to finish according to your dreams. Custom pricing available for finished living space in the lower level...the possibilities are endless…wet bar, wine room, workout room are just a few of the possibilities. Enjoy upgraded appliances throughout including tankless water heater. PHM schools and convenient to Edwardsburg, Elkhart, and local hospitals. Boasting over 3000 finished square feet and a garage that is the size of a 4-car garage, there is plenty of space for all of your living and entertaining dreams. Schedule your showing today to start your dream on track to becoming reality.