Real Estate Word of the Day: Earnest Money

Earnest money is a deposit made by a potential homebuyer to show that they are serious about purchasing a property. It's a gesture of good faith, indicating that the buyer is committed to following through with the purchase. This deposit is typically held in an escrow account and is applied towards the down payment or closing costs upon finalizing the sale.

Earnest money shows the seller that the buyer is serious about the purchase, which can make the buyer's offer more attractive, especially in competitive markets. Once the earnest money is deposited, the property is taken off the market, and the seller is less likely to entertain other offers. This gives the buyer time to conduct inspections, secure…

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Real Estate Word of the Day: Encumbrance

An encumbrance is a claim, lien, charge, or liability attached to and binding real property. It is any right or interest in land that may exist in someone other than the owner, but which will not prevent the transfer of title. Encumbrances can affect the property's value and limit its use.

Types of Encumbrances
Liens

Liens are legal claims against a property, typically used as security for a debt. Common types of liens include:

  • Mortgage Liens: These are claims by a lender against a property until the mortgage is paid in full.
  • Mechanic’s Liens: Filed by contractors or subcontractors who have performed work on the property but have not been paid.
  • Tax Liens: Imposed by the government for unpaid…

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