Deposits During The Transaction: Escrow

During the real estate transaction in Massachusetts here are the times when you will need to put your money down to show good faith to the seller. These deposits can vary on being refunded in the event of whether they fall under a contingency in your offer if something were to happen (home inspection issue not resolved, mortgage commitment, title issue, etc.) and new conditions / agreements cannot be met amongst the buyer and seller. You will need to consult with your real estate advisor and attorney for additional details regarding deposits & timelines as this is subject to differ per transaction. 

1.) Earnest Money Deposit

The earnest money deposit, or good-faith deposit, shows sellers you’re serious about wanting to buy their house. It’s a sum of money paid by buyers when they sign the purchase agreement (Offer) but before purchase and sale. The earnest money funds go toward the down payment and closing costs.

Typically, buyers can expect to hand over 1% to 3% of the total home purchase price. In a seller’s market, the closer you can get to 3%, the better. Showing good faith with a higher deposit will show the seller that you may not get "cold feet" before a home inspection OR before purchase and sale (if you have waived the home inspection contingency)

2.) Purchase & Sale Deposit

This deposit is typically 3%+ and is deposited at the time of the purchase and sale singing. The purchase and sale deposit is a part of your downpayment and depending on the market, offer situation, etc., this deposit size can vary.