How Much of an Escrow Deposit Is Needed in Real Estate Investing?
The escrow deposit in a real estate transaction says to a seller that a buyer is interested enough in purchasing his property that he is willing to risk money to prove it. In some states, an escrow deposit is necessary to bind the contract, but is most areas the clause “for good and valuable consideration” includes the value of purchasing the property. However, to a seller, the escrow is a necessary evil that he is looking not to lose, and often even after the inspection period has passed. If there is a contingency in the purchase and sale contract, the escrow can be refunded after many days of painfully waiting for the buyer’s financing to be approved. All the time the property is off the market and the seller never knows for sure if the buyer will close. Whenever a buyer is doing conventional financing, the contingent section for financing should not include specific interest rates or terms, but should say “prevailing rates” in case the buyer doesn’t get exactly what he wanted and he
