Buyer Tips

Earnest Money Deposit and the Naples Home Buyer

When you put in an offer for a Naples or Marco Island home, you will most likely be asked to put down an Earnest Money Deposit. This shows the seller your commitment to buying the property. In return, the seller agrees to take it off the market while the sales process takes place. But what happens if your mortgage loan falls through? Do you get the deposit back? As long as you take a few measures to protect yourself.

After you put in an offer on a Marco Island or Naples home, you will be asked to put down an Earnest Money Deposit. Protect these funds from forfeiture by utilizing these protective measures.

Earnest Money Deposit

What Is It?

Search homes for sale in the Naples/Marco Island areaAn Earnest Money Deposit is considered a “good faith” payment. Typically, it runs anywhere from $500 up to 2% of the sale price. This money stays in escrow until the final sale. At that time, it usually gets credited towards the down payment and/or closing costs. If the deal falls through at any time, the funds may be given back to the buyer or forfeited, depending on any contingencies in place.

Financing Contingency

One way to protect your earnest money is by implementing a financing contingency into your sales contract. This protects you in case you can’t secure funding for the property. Without this contingency, you forfeit the deposit if funding proves impossible.

One way to ensure your deposit stays secure is to seek out a pre-approved mortgage. Start the process well before you begin looking at Naples or Marco Island homes. This helps you form a budget since you now know how much a bank will lend to you. Stay within that price point and you should be OK.

Pre-Approval Doesn’t Equal Final Approval

Even with a pre-approval letter, your home loan could fall through in the end. How? Lenders run an initial credit check when they perform their pre-approval process. Then, when it gets closer to closing, they run another credit check. Any changes in that time might jeopardize your approval. So, while in escrow, abstain from making any large purchases (furniture, cars, etc.). Also, put the kibosh on opening any new lines of credit. These could temporarily ding your credit and put you below the acceptable levels for approval. Wait until after you sign your final paperwork and move into your new home before making any major purchases.

Michelle Thomas, Premier Sotheby’s International Realty, Luxury Naples/Marco Island Homes & Condos

Questions Naples Buyers Should Ask When Considering a Home Purchase

Every home has its own unique quirks. Maybe a light switch for the dining room is located around the corner in the hall. Perhaps the deadbolt on your front door must be parallel to the door frame in order to be locked rather than perpendicular (opposite of what you’d expect). And maybe neighborhood noise kicks up every afternoon. But it tends to settle by evening time. The longer you live there, the more used to these eccentricities you become. A new owner could definitely benefit from this knowledge. Here are a few important questions Naples buyers should ask when considering a home purchase.

It's easy to overlook things when you find a house you're excited about. But, it's important that Naples buyers ask a few crucial questions when considering a home purchase.

What Naples Buyers Should Ask the Seller When Considering a Home Purchase

What Eccentricities Do I Need to Know About This House?

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For example, are there light switches or electrical outlets in unique places? Do any of the windows or doors stick when you open or close them? Does the thermostat actually kick on a few degrees higher/lower than where it is set at? Ask them if there is anything you should know that would make daily living a little easier in this Naples home. Of course, make sure any questions about the home’s quirks get asked before you do your final walkthrough.

How Does This Work?

While on the topic of questions Naples Buyers should ask before the final walkthrough, find out how the different electrical/electronic/”smart” features work. Just because you know how to operate your own thermostat at home doesn’t mean you know how this new one works. Are the sprinklers on a timer? Ask the seller or their representative to demonstrate how they operate. Same goes for the alarm system, intercom system, appliances, and anything else that you may not have ever used before. Of course, asking about these when you’re initially checking out a home may not be appropriate. These should probably be saved for after you’ve entered escrow but, before your final walkthrough.

What Problems With the House Have You Encountered in the Past?

Was there a leaky roof? Did a pipe burst under the sink? Did they ever have to deal with mold? Mice? Termites? How long ago were the problems discovered and what did they do to fix the situation? Florida law requires sellers to disclose any past or present issues with a property. And they can’t refuse to answer any questions Naples buyers ask if the homeowner actually knows the answer. Feel free to compare the answers they provide to your questions with what was or was not revealed in your official disclosure statement. If there’s a discrepancy, definitely bring it up to your REALTOR@.

What Do You Think of the Neighborhood?

When you’re considering a specific Naples home, I highly recommend driving around the neighborhood at different times of the day and days of the week. This gives you a sense of the day-to-day goings on in the area. But, Naples buyers also need to ask the seller how they feel about the neighborhood. Find out how they really feel about living there (both good and bad). Also, request their recommendations for the best coffee shop, bookstore, restaurant(s), grocery store, etc. This gives you a better sense of the community as well as helps you develop a bond with the seller themselves.

When searching for the perfect home, Naples buyers may get excited about amenities. But they often forget to ask about these specific things. When you’re ready to start looking for your next home, please contact me.

Michelle Thomas, Premier Sotheby’s International Realty, Luxury Naples/Marco Island Homes & Condos