You may think that buying your dream property is as ideal as signing a contract along with the owner and eventually giving the down payment. But the actual scenario is that you have to prove that there is “earnestness” attached to the buying of the property. Well what is the earnest money deposit?
This deposit is a portion of the down payment. This shows the buyer’s interest to implement the agreements that is set forth in the contract. An escrow account will take care of the deposit. This escrow is a form of trust fund that is managed by both the parties and has effect till you close the transaction.
Now let’s see some of the important aspects of an earnest deposit:
- As soon as the purchase agreement is signed the buyer and seller will make deposit payment. This check or money order is then kept aside in an escrow which is maintained by the specific real estate brokerage. There are strict laws from the state regarding the dealing of these monies. It should be made clear that this money should never go in the hands of a broker through his business bank account.
- Just as you are careful in getting a receipt for any financial transaction it is essential to ask for a receipt, for the earnest deposit which would be provided to the real estate agent.
- With regard to the question of how much earnest amount one should pay, it has lot of variations. Having said that, different states have their legal limits for the earnest money. In case of a purchaser who can pay only less down payment he has to spend lot of earnest deposit. This is as a surety that he or she will get through a mortgage.
- Generally the experts feel that the earnest money can be somewhere between 2% to 5%. This percentage is calculated from the purchase price. But again the actual money depends on the thriving of the market.
- In case the purchasers decide on paying a large chunk as earnest deposit the lender will be interested to confirm the source of these monies.
- One important thing to be kept in mind is that the earnest deposit is not in any way an additional expenditure of purchasing a property. At the time of closing the deal it will be added with the down payment.
- Earnest deposits aren’t simply some random money paid. These sums enunciate the earnestness of the buyer and show that they are capable of carrying out their promises as per the purchase agreement. The real estate transaction conveniently commences with the earnest deposits that safeguards the seller in case the purchaser gives problems in the specific deal.
- You would be investing some money in your bank account. Similarly an earnest deposit will provide you with interest through its escrow.
Dc Fawcett, the real estate expert, and also the founder of the Virtual Real Estate Investing Club, is well-equipped in the real estate scenario and assists people develop their real estate investing business.
Property is by no means a trivial investment. Every step you consider pertaining to your portfolio should adhere to the comprehensive goal of the portfolio. If you mission is to gain money, selling off an investment property is reasonable.
Selling off your investment property is not as easy as selling a stock. When you are in the process of selling your own home it can be daunting when you are not aware of where to commence. In fact selling off an investment property is also par to the process of selling off your home. The capital issues as well as the tax implications add more difficulties to the sale.
Now let’s see some of the factors that are important so that you can make a profit out of your sale of investment property:
- You will first list your property for sale. Here then, confirm whether you have looked up all the possibilities so that it makes a good sale. You may be having different reasons to part off you with property but be cognizant of the tax concerns which will eventually burn some extent of your income.
- Real estate investors are those who are mainly interested in investment properties as far as promotion concerned. But this doesn’t mean that the other types of purchasers are not interested in your property. Your property might have given use to you to give you a stable profit. This would have been done through rent. But again there are different types of purchasers too who would be the target of the deal.
- A real estate agent comes to the aid of you and will help you in expanding the options as far as promoting your house for sale is concerned. By this you have keen interest in the property and get in a substantial deal.
- When you possess investment property, capital gains is one of the many major benefits. What is its main benefit? These gains are taxed at a lesser rate and there are no fixed limitations on the frequency of utilizing these rates. At the time of selling your investment property you will have the responsibility to pay a capital gain tax. You would be paying a tax when your primary property is being sold off. The capital gains tax is in fact more than this tax.
- You can avoid expending money on capital gains on the income generated from the sale of your investment. This is done by using the escrow which is utilized straightaway to buy another investment property. There is a section IRS 1031 which gives the benefit of this tax deferral.
- For instance you have taken the help of property managers to assist you in dealing with your portfolio of income-generating properties. Here then you can use incorporation to get the benefit of more advantageous tax rules. But again if the investment property falls under your corporation your means of monthly income will not be simple.
- While selling off your investment property if you do it at the right time and with appropriate methods, you would surely get a substantial profit.
Dc Fawcett, the real estate expert and founder of the Virtual Real Estate Investing Club, has rich experience in virtual real estate investing deals. One can watch his free videos to get more idea of real estate deals.
Many think that real estate agent and broker are one and the same. However, we would say, it is almost the same as there is a thin difference between the two. DC Fawcett, in this session, tells you the major difference between real estate agent and broker.
REAL ESTATE AGENTS
The fact is there are many types of real estate agents wherein not only the public but also the agents themselves get confused about the difference between them. In a crowd, there are agents who add titles to their name. They may be an associate, a real estate consultant, a salesperson or the realtors. However, they are termed as agents who cannot work as a broker without an appropriate license.
The agents who give the advice for real estate must have a respective license without which they are prohibited from advising. Most of the sites maintain online sites where the buyers or the consumers can check for their names whether they have the license are not. If they don’t possess, the license, the consumers can file a suit on them.
MAJOR DIFFERENCE BETWEEN REAL ESTATE AGENT AND BROKER
Here are the differences between real estate agent and a broker.
- A real estate broker is a step ahead of real estate agent. They can work either independently or hire salespersons. The broker’s exams are longer and tougher than the salesperson’s exams. They are considered to have higher standards of knowledge. Agents have licensed They are not real estate brokers. They have to work under the broker who appoints them. They cannot work on their own. Brokers are held responsible for their actions.
- Broker’s name is placed on the listing whereas agent’s name is not placed on the listing.
- A broker can directly deal with the buyers and the sellers. An agent has to work as per the broker’s instructions.
- An agent working under the broker works with the consumers to buy and sell homes whereas the broker handles all types of work such as administrative duties, listing homes, host open houses, and negotiate prices, etc.
- A real estate agent has to share the commission after the sale is closed, which covers the resources provided by the broker such as office space, training, loan assistance, and marketing etc. A broker can cut out the middlemen at his or her wish and will, thereby earning full commission by continuing to sell homes.
- To become a real estate broker, one has to be a real estate agent.
- The real estate agent course covers up the basics like, listing or selling process, contracts, taxes and financing. The broker course covers these things in depth.
- All real estate brokers are real estate agents but all real estate agents are not real estate brokers.
Many real estate agents would like to become a broker. To achieve this, they have to upgrade themselves and clear the exams to get the license. This enables them to move up to the management position to the senior or junior level.