Offer vs. Contract and everything about Earnest Money (Deposit)

Even though as a Buyer you are using the Contract Form to spell out all terms of your offer, this offer will not become a Contract until Seller accepts it.

What is Acceptance?

When Seller or Buyer, responding to an offer or counteroffer of the other do the following:

1. signs the offer and counteroffer where noted to indicate acceptance
2. and communicate to the other party or to the party's agent that the offer or counteroffer has been signed as required.

What if while you are waiting for Seller's response you have changed you mind, and do not want to purchase the property anymore?

Not a problem, as long as you correctly communicate that to the Seller...Talk more to me or your Agent about how it should be done.

What is Earnest Money (EM)? And as a Buyer, why do you need to submit it?

Earnest Money (also known as Deposit) is a promise that as a Buyer you will follow the rules and terms of the agreed contract. This money can be returned to you at the Title company during closing or become your downpayment.

Do you need EM to write an offer?

No, in state of Utah, you only need your good intention? However, if the offer becomes a contract, in other words upon Acceptance of the offer by all parties, this money shall be deposited in accordance with state law.

Where and When will it be deposited?

As a Buyer you should give check or cash to your agent who should request his/her broker to deposit it within three banking days after the offer acceptance to the bank. The bank account most of the time will not be interest bearable one.

As a Seller, you are interested prior to final acceptance of this offer or few days after-- request a Buyer to provide proof of the earnest money deposit as being received by Buyer's Agent.


Required amount?

While a lot of other states require earnest money to be at least 2-3% of the purchase price. Utah has no such requirement.It is personal decision between Seller and Buyer. Sometimes, you can see as little as $500 and as high as complete purchase price.

As a Buyer, because the Utah Purchase Contract is very much biased, if you play by the rules, you will not loose your Earnest Money.

As a Buyer, you can choose your deposit to be with Title company. The only thing keep in mind that title companies are regulated by the Department of Commerce, and they may have different release rules which have nothing to do with your agent.

What if EM check is returned as "NSF"? (not sufficient funds)

Very grey area, but Seller can cancel agreement if EM check bounces back.
As a Seller, good idea to specify this right in a contract.