If my earnest money is to be used for the final amount at closing, why do they cash my check? This is a common question, but your earnest money is a promise to pay and good faith to continue with this transaction. If you had nothing on the table to lose, buyers may walk away from a transaction quicker. If a transaction is to close in a short period of time, good funds will be needed, rather than waiting for a personal check to clear the bank.
I always remind my buyers the check WILL BE CASHED, and to be sure the funds are available in the account before delivering the earnest money check. If this check bounces, it is a sure sign the transaction will not go to closing!
This good faith money will be reduced from the total amount you will need at closing. Typically it is held at the Title Company on behalf of the buyer. If there are bumps in the road, and the buyer opts to terminate, two forms - Notice to Terminate and Earnest Money Release will need to be signed by both buyer and seller for the earnest money to be returned to buyer.
As a Denver REALTOR® I can guide you through the Denver home buying process with ease. Give me a call and we can get started with the Denver home purchase!