When a person buys a house or a piece of land, the seller will usually require him to deposit a down payment to the seller before making the actual purchase. Now this is also considered as a down payment and the amount that the buyer will have to deposit would depend on the terms of the two. This money that is deposited is known as earnest money.
For those who do not know the function of this type of deposit, it is to show the seller that the buyer is actually interested. It is more like a courtesy action that the buyer will have to make. This is to show that the buyer is ready to buy the property and promise not to back out.
Now as for the amount that one would have to deposit, this would usually depend on the agreement. Now the two parties will be the ones who will be agreeing on the amount. They will specifically put the amount of how much the buyer must deposit somewhere in the contract.
Now if one would want to know, there are actually factors that would affect the amount that will be deposited. The most common of these factors would actually be the market value. The sellers would usually base the down payments on how much the market value of the land or house is.
Now from the point of view of a seller, this is actually a form of security. This is a form of security simply because this is a way for the seller to make sure that the purchaser does not back out of the deal. Now the purchaser will make the deposit so that the seller will know the buyer will push through.
Of course in the point of view of the purchaser, this is more of an act of courtesy to the seller that he is earnestly interested. Now in a sense, this is a promise that the buyer made with the seller that he will definitely buy the land or the property no matter what. Now of course if one were the buyer then once he puts in the money, he will definitely not want to back out.
Many actually think that once the money is deposited, it can be actually be gotten back once the buyer has given up on the purchase. Now this is not so as once the money is in, it cannot be gotten again. As stated above, the payment is a form of binding the purchase.
For those who do not know the function of this type of deposit, it is to show the seller that the buyer is actually interested. It is more like a courtesy action that the buyer will have to make. This is to show that the buyer is ready to buy the property and promise not to back out.
Now as for the amount that one would have to deposit, this would usually depend on the agreement. Now the two parties will be the ones who will be agreeing on the amount. They will specifically put the amount of how much the buyer must deposit somewhere in the contract.
Now if one would want to know, there are actually factors that would affect the amount that will be deposited. The most common of these factors would actually be the market value. The sellers would usually base the down payments on how much the market value of the land or house is.
Now from the point of view of a seller, this is actually a form of security. This is a form of security simply because this is a way for the seller to make sure that the purchaser does not back out of the deal. Now the purchaser will make the deposit so that the seller will know the buyer will push through.
Of course in the point of view of the purchaser, this is more of an act of courtesy to the seller that he is earnestly interested. Now in a sense, this is a promise that the buyer made with the seller that he will definitely buy the land or the property no matter what. Now of course if one were the buyer then once he puts in the money, he will definitely not want to back out.
Many actually think that once the money is deposited, it can be actually be gotten back once the buyer has given up on the purchase. Now this is not so as once the money is in, it cannot be gotten again. As stated above, the payment is a form of binding the purchase.
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