Contracts are a work in progress, a continuous evolutionary march toward marrying the wants and desires of the buyer with the wants and needs of the seller.
It's a dance akin to courtship, with suitors and damsels seeking to find their perfect union often by subtly indicating intent through calculated gestures. Move and countermove are carefully articulated and constructed within accepted social guidelines as the wooer and wooee progress toward what will hopefully result in a more perfect union.
In taking it to the next level, we strive to accentuate our value and the reasons why we're more desirable than others and should come together.
Overlay this loosely romantic protocol on paper, and in essence you have begun the same process with a real estate contract. In support of the amount you're willing to pay and to indicate your sincerity, you include earnest money, which is essential. Just like a proposal of marriage, this real estate offer ain't got no zing unless you got that ring. It's a tie that binds until money and property are exchanged and the deal is closed.
While there are many considerations important to creating a contract, earnest money is an absolute legal essential. Expressed in a simplified scientific linear form, the equation would read: offer + earnest money + acceptance = contract.
In addition to satisfying the requirements imposed by law, earnest money can be a useful instrument to strengthen your offer.
Assume for a moment you've put together a written offer for a house, but at the same time so has someone else. Both contracts are identical except that your offer comes with a bigger ring in the form of more earnest money.
Can you guess which offer is more desirable and has an increased likelihood of being accepted? I'm voting for the offer with the bigger rock -- it's got more zing.
Nothing expresses intent better than cold hard cash. It warms a seller's heart when they see it and provides a psychological cushion of comfort by indicating that you're not commitment challenged or impaired but serious in your offer.
How much money you should offer or what's an acceptable and appropriate amount is a question that is endlessly debated. Arguments can be found covering the full gamut of possibilities -- with some favoring a specified percentage of the purchase price, others favoring as much money as possible and still others favoring the opposite.
Earnest money amounts are an inexact science, and I lean toward a resolution that combines sincerity with what size ring a buyer is willing to offer.
STEVEN J. LOWENSTEIN, a native of Cincinnati, is a Realtor with Coletta & Associates Realtors. He's a graduate of the University of Cincinnati and holds a Master's degree from North Texas State University.
