Earnest Money: Step 6 of 8 to Buying a Home in Birmingham Alabama

Buying a home can be a daunting task. Because, most people only buy a home once every few years (or longer), we wanted to take the time to remind you of the steps involved in buying a home. This way, you can feel like you have some control of this home buying process.

We have identified eight steps to buying a home. These are:
1. Decide to buy a home.
2. Find a great real estate consultant.
3. Secure financing
4. Find your dream home.
5. Make a written offer and negotiate the price.
6. Open an escrow account. (Earnest Money)
7. Have a home inspection.
8. Sign the final documents, get the key, and move into your new home.

Step 6, Submit Earnest Money a.k.a. Open an escrow account. After an agreed upon sales amount has been found, you will submit earnest money, or open as escrow account. Your real estate agent will be the go between for you on this.

The purpose of this amount of money is intent, or proof, that you really do intend on purchasing the home. It is not a down payment. You down payment will be handled through your mortgage company. The earnest money acts as a "good faith deposit" in the hands of the seller's agent's company. I have heard that many buyers may offer as high as 5-10% of the selling price of the home. In my own experience, most buyers have submitted from between .5%-2%.

After this has been done, it will be time to have a home inspection...