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Tag: buying

  • What Is a MUD in Real Estate and What Texas Buyers Should Know Before Making an Offer

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    Key takeaways

    • A Municipal Utility District, or MUD, provides water, sewer, drainage, and infrastructure in areas that lack city utilities.
    • Homes in a MUD include a MUD tax that helps repay bonds issued to build public infrastructure.
    • MUD tax appears on your property tax bill; however, it is separate from county, school district, and city tax rates.
    • Homestead exemption generally does not reduce MUD tax.
    • Before making an offer on a home in a MUD, Texas buyers should review the MUD disclosure, understand the current tax rate, and confirm whether the rate may decrease.

    Buying a home in Texas? You might be in a MUD without realizing it

    If you are preparing to make an offer on a home in Texas, especially in a master-planned community or a newer development, there is a strong chance the home is located inside a Municipal Utility District. A MUD allows development in areas where city utilities have not been extended; however, it also adds a high cost to your annual property tax bill.

    Understanding how MUDs operate and how MUD taxes are calculated is essential before you submit an offer.

    What is a MUD in real estate?

    A Municipal Utility District is a political subdivision created under Texas law. It provides essential services, including water supply, wastewater treatment, drainage, and stormwater management. In some cases, a MUD may also help fund roads and utility extensions.

    Developers establish MUDs on land that lacks city utilities. The MUD finances infrastructure by issuing bonds, and homeowners repay those bonds through MUD taxes on their property tax statements.

    This structure is common in fast-growing areas such as Houston, Dallas-Fort Worth, Austin, and San Antonio.

    How MUD tax works in Texas

    1. The MUD issues bonds

    These bonds fund water lines, sewer systems, drainage improvements, and basic infrastructure.

    2. Homeowners repay the cost

    After homes are completed, homeowners in the district pay a MUD tax to repay the bonds and support ongoing operations.

    3. The tax appears on your property tax bill

    Your property tax bill includes county taxes, school district taxes, and city taxes if applicable, as well as the MUD tax.

    4. Rates vary by district

    Newer MUDs with higher debt loads tend to have higher rates; established MUDs may reduce their rates over time as bonds are repaid.

    Example: What MUD tax looks like

    To give you a sense of how MUD tax is calculated, here is a simple example.

    Say the MUD tax rate is 80 cents per $100 of value, and your home is assessed at $350,000. That would look like this:

    • $350,000 divided by 100 gives you 3,500 units
    • 3,500 units multiplied by $0.80 comes out to $2,800 per year

    In this example, you would pay about $2,800 annually in MUD tax. This amount is added to the other taxes on your property tax bill, including county, school district, and city taxes.

    Do MUD tax go away?

    MUD taxes may decrease over time as bonds are repaid and more homes join the tax base. Some MUDs lower their rates significantly as they mature.

    In many cases, however, a portion of the tax continues long-term to cover operations, maintenance, and future improvements. Annexation by a city may change the tax structure, although it is not guaranteed and varies by location.

    Are MUD taxes part of property taxes?

    Yes. MUD tax is included in your property tax bill, although it is levied by an independent taxing unit rather than a city or county.

    Does the homestead exemption apply to the MUD tax?

    In most cases, no. The Texas homestead exemption reduces school district taxes and may reduce some city or county taxes; however, it does not usually apply to MUD taxes because MUDs are independent taxing entities.

    MUD vs. PUD vs. PID: What is the difference?

    Texas buyers often see MUD, PUD, and PID when researching neighborhoods, although each one serves a different purpose and affects your costs differently.

    MUD (Municipal Utility District)

    A MUD provides water, sewer, drainage, and infrastructure in areas without city utility services.
    Cost: A MUD tax on your property tax bill.

    PUD (Planned Unit Development)

    A PUD is a planned neighborhood with parks, trails, and shared amenities.
    Cost: HOA dues; not a special tax.

    PID (Public Improvement District)

    A PID funds improvements such as landscaping, lighting, entry monuments, parks, and common-area maintenance.
    Cost: A PID assessment that appears on the tax bill or is billed separately.

    Quick comparison

    Feature MUD PUD PID
    Purpose Utilities and infrastructure Community layout and amenities Enhancements and maintenance
    Cost type MUD tax HOA dues PID assessment
    Managed by Elected MUD board HOA or developer City or county
    Buyer impact Higher property taxes HOA costs Added assessments

    A home may be located in a MUD, a PUD, a PID, or a combination of the three. Always confirm before making an offer.

    1. Ask for the current MUD tax rate

    Rates vary by district. Knowing the exact rate helps you calculate your long-term costs.

    2. Read the required MUD disclosure

    Texas law requires sellers to provide a disclosure explaining the district’s taxing authority and your financial obligations.

    3. Determine whether the MUD tax is declining

    A declining rate may indicate the district is maturing. Newer MUDs often maintain higher rates until more homes are added.

    4. Add the MUD tax to your monthly payment estimate

    Including the MUD tax in your property-tax projections ensures that your mortgage and escrow estimates are accurate.

    5. Consider how long you plan to stay

    Long-term ownership may allow you to benefit from declining rates. Short-term ownership may leave you paying higher early-phase taxes.

    6. Ask about annexation

    Some MUDs may be annexed by a city; however, this is not common and varies by area.

    7. Compare homes inside and outside MUDs

    Homes outside MUDs may have lower taxes and older infrastructure. Homes inside MUDs often have newer utilities and modern planning standards.

    What this means for Texas homebuyers

    If you are shopping for a home in Texas, especially in a newer or master-planned community, you should expect to encounter MUD taxes. MUDs help provide essential utilities and support community growth; however, they add a long-term cost to your property taxes.

    Understanding how MUDs operate helps you budget effectively, evaluate long-term affordability, and make informed decisions when submitting an offer.

    Ask your real estate agent or title company to verify whether a home is located in a MUD and to provide the current tax rate so you can make the most informed choice.

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    Jasica Usman

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  • Seller Concessions 101: What They Are and How They Can Help You Save

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    Seller concessions are closing costs or fees that a seller agrees to cover to help reduce a buyer’s upfront expenses. These costs are negotiated during the offer process, and seller concessions can make a home purchase more affordable without lowering the home’s sale price. In the first quarter of 2025, 44.4% of U.S. home sale transactions included seller concessions — the highest share in several years.

    Buyer demand and market conditions determine how likely you are to receive seller concessions, but knowing how they work gives you an advantage when you’re preparing an offer. Instead of focusing only on price, understanding seller concessions helps you evaluate the true cost of buying a home and identify opportunities to reduce your upfront expenses. This guide explains what seller concessions typically include, when buyers benefit most from them, and how to use them strategically in today’s housing market.

    What are seller concessions in real estate?

    Seller concessions are financial contributions a seller makes to help reduce a buyer’s out-of-pocket expenses at closing. These contributions can cover a range of fees, including lender charges, title and escrow costs, prepaid taxes, homeowners insurance, or even the cost of a home warranty.

    An example of seller concessions: Covering closing costs

    A buyer might negotiate $5,000 in seller concessions to help offset closing costs. If the seller agrees, the amount is included in the purchase contract and applied at closing, lowering the buyer’s upfront expenses while being deducted from the seller’s proceeds.

    An example of seller concessions: Buying down the interest rate


    A buyer may also request seller concessions to buy down their mortgage rate. For instance, a seller could contribute $7,500 toward discount points, allowing the buyer to secure a lower interest rate and reduce their long-term monthly payments. This type of concession can make the home more affordable over time, especially when rates are elevated.

    What closing costs do seller concessions cover?

    The seller may be able to cover part or all of these closing costs:

    • Property taxes: Prepaid property taxes through the end of the year at closing.
    • Title insurance: Title insurance protects you and your lender if someone comes forth with a claim for the home’s title.
    • Loan origination fees: These origination fees cover your lender’s charges for processing your loan.
    • Inspection fees: Inspection fees cover the cost of inspections required for the loan. For example, in some states and on some loans, a pest inspector must evaluate your property before a sale can go through.
    • Recording fees: Recording fees cover the expense of documenting your home’s purchase with your local government.
    • Appraisal fee: This covers the cost of getting a licensed third-party appraisal of the home to determine the market value.
    • Attorney’s fees: In some states, you need an attorney to review closing documents. Attorney’s fees cover the cost of a real estate attorney.
    • Points: Mortgage points (also known as discount points) are upfront interest you pay to reduce your interest rate.

    Once you apply for your loan, your lender will provide you with a Loan Estimate, which outlines all your estimated closing costs. You can then work with your real estate agent to decide which ones to ask the seller to pay for.

    Why do sellers offer concessions?

    Sellers might agree to concessions to:

    • Help a buyer afford the home
    • Attract more offers in a slow market
    • Offset issues found during the home inspection
    • Speed up the closing timeline

    In a buyer’s market or when a home has been sitting for a while, concessions can make the difference between closing a deal and continuing to wait.

    Who benefits from seller concessions?

    Seller concessions can create advantages for both buyers and sellers during a home sale. For sellers, offering concessions can make their home more appealing in a competitive or buyer-friendly market. A concession can help attract more offers, shorten time on market, or encourage a buyer to choose their home over similar listings.

    Buyers also benefit from seller concessions, especially those who need help covering upfront costs. Many first-time buyers underestimate how much they’ll need at closing, and seller concessions can reduce expenses like lender fees, taxes, and insurance. By lowering the cash required at closing, seller concessions can make the overall purchase more affordable and accessible.

    Seller concession limits by loan type

    Loan Type Max Seller Contribution
    Conventional (<10% down) 3% of the purchase price
    Conventional (10–25% down) 6%
    Conventional (25%+ down) 9%
    FHA Loan 6%
    VA Loan 4%
    USDA Loan No formal limit (but should be reasonable)

    These limits are set by the loan program, not the seller, so both buyers and sellers should work with a lender to ensure compliance.

    Pros and cons of seller concessions

    For buyers

    • Lower upfront costs when buying a home: Seller concessions can significantly reduce the cash a buyer needs at closing by covering expenses like lender fees, taxes, and homeowners’ insurance. This makes buying a home more affordable, especially when buyers are also saving for their down payment. 
    • More financial flexibility for buyers: By lowering out-of-pocket closing costs, seller concessions allow buyers to keep more money set aside for moving expenses, home repairs, furniture, or emergency reserves. This added flexibility can be especially helpful after making a sizeable down payment. 
    • Easier loan approval in some cases: Reduced cash-to-close requirements can help some buyers — particularly first-time homebuyers — qualify more easily for a mortgage. With fewer upfront costs, seller concessions can help bridge the gap between available savings and the total cost of buying a home.

    For sellers

    • Attracts more buyers: Offering seller concessions can draw in buyers who may not have enough cash for closing costs. 
    • Helps protect the sale price: Instead of lowering the list price, sellers can use concessions to keep the contract price intact while still offering value. 
    • Useful in shifting or slow markets: Seller concessions can help a property stand out when inventory is high or demand is softer.

    Potential downsides

    Possible drawbacks of seller concessions

    • Risk of appraisal issues: If the sale price is increased to include seller concessions, the home may not appraise at the higher amount. 
    • Reduces seller’s net proceeds: Any concession provided lowers the seller’s bottom line at closing. 
    • Less effective in strong seller’s markets: When demand is high and competition is strong, sellers typically don’t need to offer concessions.

    >> Read: Disadvantages of Sellers Paying Closing Costs

    Tips for negotiating seller concessions

    • Understand how much you’ll need for closing costs before submitting an offer.
    • In competitive markets, offer a slightly higher price to offset the seller’s concession.
    • Be prepared to justify the request with your financing needs or inspection findings.
    • Work with an experienced Redfin real estate agent to guide your strategy.

    FAQs about seller concessions

    What is the meaning of seller concessions in real estate?

    Seller concessions are costs the seller agrees to pay on behalf of the buyer, typically to cover some or all of the buyer’s closing costs.

    Are they negotiable?

    Yes, they are typically negotiated as part of the initial offer and finalized in the purchase agreement.

    Do they affect the loan or appraisal?

    They can. If the concessions push the sale price above market value, the home may not appraise at the agreed price.

    Can they cover the down payment?

    No. Concessions can only be used for allowable closing costs and fees, not for the buyer’s down payment.

    Are they common?

    They are especially common with FHA, VA, and USDA loans or when the market favors buyers.

    A final note

    Seller concessions are more than just financial assistance — they’re a strategic negotiation tool that can benefit both buyers and sellers. Buyers can use them to lower upfront costs and make a purchase more affordable, while sellers can use concessions to attract stronger offers or move a home faster without reducing the list price. Understanding how seller concessions work and when to request or offer them can give you a meaningful advantage in today’s real estate market.

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    Jasica Usman

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  • When Does the Seller Get Money After Closing? What to Expect and How Long It Takes

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    Quick answer: Most sellers receive their money within 24–48 hours after closing, though timing can vary depending on:
    – The type of closing: Wet closings may allow same-day payment, while dry closings can take several business days.
    – How the seller is paid: Wire transfers are typically faster than cashier’s checks, though bank processing timelines apply.
    – Recording and banking requirements: Deed recording, cut-off times, weekends, and holidays can all affect when funds are released.

    Selling a home is a major financial milestone, and one of the first questions sellers ask is when does the seller get money after closing? In most cases, sellers receive their proceeds within 24 to 48 hours, though some transactions pay out the same day while others take several business days.

    Whether you’re selling a home in Kansas City, MO, Portland, OR, or Los Angeles, CA, understanding how and when you’ll receive your funds can help you plan your next move with confidence. In this Redfin guide, we’ll explain when sellers get paid after closing, how wire transfers work, what can delay payment, and what to expect along the way.

    What happens between accepting an offer and getting paid

    After accepting an offer, several required steps must be completed before a seller can receive their money. This process typically takes 30 to 60 days and explains why payment usually happens shortly after closing, not immediately.

    Before funds can be released:

    • The buyer completes inspections, appraisal, title work, and secures final loan approval.
    • The seller signs closing documents and ownership officially transfers once the deed is recorded.
    • The escrow or closing agent confirms the buyer’s funds have cleared.
    • The seller’s mortgage, commissions, and closing costs are paid.

    When sellers typically get paid after closing

    Once the transaction is finalized, sellers are usually paid shortly after closing. The exact timing depends on how the sale is completed and how funds are processed.

    The timeline below shows when sellers typically receive their proceeds across common closing scenarios.

    Closing scenario

    When seller typically gets paid

    Wet closing + wire transfer

    Same day or within 24 hours

    Wet closing + cashier’s check

    1–3 business days

    Dry closing

    2–5 business days

    Wire sent after bank cut-off time

    Next business day

    Weekend or holiday closing

    1–3 additional business days

    Because these steps can take time to process, sellers are generally paid after closing rather than at the signing table. It’s best to wait until funds are deposited before making major purchases or scheduling another home closing.

    How long does a wire transfer take after closing?

    A wire transfer after closing typically takes the same day to 48 hours, depending on bank processing times and when the transfer is initiated.

    In many transactions, funds move in two steps:

    • The buyer’s lender wires funds to the escrow account.
    • Escrow wires the seller’s proceeds to the seller’s bank.

    Several factors can affect wire transfer timing:

    • Bank cut-off times (often between 2–4 p.m.)
    • Whether the transfer is domestic or international.
    • Weekends and federal holidays.
    • Additional security verification by the bank.

    Wire transfer vs. cashier’s check: which is faster?

    Sellers are typically paid by either wire transfer or cashier’s check, and the method chosen can affect how quickly funds become available after closing.

    Wire transfer

    • Usually the fastest option.
    • Funds often available the same day or next business day.
    • Requires careful verification to avoid wire fraud.

    Cashier’s check

    • Must be deposited and cleared.
    • Banks may hold funds for up to seven business days.
    • Often considered safer due to fraud concerns.

    How wet and dry closings affect seller payment

    The terms “wet” and “dry” closing describe when funds are released relative to document signing, which can influence whether a seller is paid the same day or several days later.

    Wet closing

    • Funds are released immediately after documents are signed.
    • Sellers may get paid the same day.
    • Required in most states.

    Dry closing

    • Documents are signed first.
    • Funds are released days later.
    • Requires agreement from all parties.

    Dry closings are allowed in the following states, where payment typically takes 2–5 business days:

    While most sellers are paid shortly after closing, delays can occur in certain situations. These delays are typically administrative and temporary, and often relate to processing or verification requirements.

    Common reasons include:

    • Deed recording delays at the county level.
    • Buyer’s lender funding delays.
    • Outstanding liens or payoff verification.
    • Wire transfer initiated after a bank’s cut-off time.
    • Weekend or holiday closures.
    • Dry closing agreements.

    What if the buyer’s funds don’t clear?

    It’s rare for a buyer’s funds not to clear, but delays can occasionally occur due to financing, lender, or banking issues.

    When this happens:

    • The escrow officer notifies all parties.
    • Funds are not released until the issue is resolved.
    • Seller protections outlined in the contract typically apply.

    The bottom line: when does the seller get money after closing?

    Most sellers receive their money within 24 to 48 hours after closing, though the exact timing depends on the closing type, payment method, and bank processing rules. Understanding how wire transfers work and planning for possible delays can help ensure a smoother, more predictable payout. With the right preparation, you’ll know what to expect and be ready to move forward confidently after your home sale.

    FAQs: How long does a wire transfer take after closing?

    1. Do sellers get paid the same day as closing?

    In some cases, yes – especially with wet closings and early wire transfers. Most sellers, however, are paid within 24 to 48 hours.

    2. How long does a wire transfer take after closing?

    Wire transfers typically take the same day to 48 hours, depending on bank cut-off times and holidays.

    3. Can a seller get paid before the deed is recorded?

    Usually not. Most states require the deed to be recorded before funds are released.

    4. What’s the fastest way for a seller to get paid?

    A wire transfer initiated before the bank’s cut-off time in a wet closing state is usually the fastest.

    5. Do weekends and holidays delay payment?

    Yes. Banks and county offices are often closed, which can delay fund disbursement.

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    Emily Pascale

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  • Earnest Money vs. Option Fee: What Home Buyers Need To Know

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    Key takeaways

    • Earnest money and option fees are both payments buyers make when submitting an offer on a home, but they serve different purposes.
    • Earnest money shows a buyer’s commitment and is applied toward the purchase at closing.
    • Option fees secure the buyer’s right to terminate the contract during a defined option period.
    • Both payments have specific timelines, refund rules, and conditions depending on the purchase contract.

    What is earnest money?

    Earnest money is a good-faith deposit that demonstrates a buyer’s serious intent to purchase a home. It serves as a financial commitment to the seller, showing that the buyer plans to move forward with the transaction.

    The amount of earnest money varies by market, but it typically ranges from 1% to 3% of the home’s purchase price. This deposit is usually delivered to the title company or escrow agent for safekeeping. If the deal closes, the earnest money is applied toward the buyer’s down payment or closing costs.

    If the sale falls through under certain conditions, such as inspection or financing issues, the buyer may be able to recover the deposit. However, if the buyer cancels for reasons not covered in the contract, the seller may keep the earnest money as compensation.

    Understanding earnest money

    In most real estate contracts, earnest money is due shortly after the offer is accepted, often within three business days. It’s held by a neutral third party until the sale closes or the contract is terminated. This ensures that both the buyer and seller are protected during the transaction.

    If the deal moves forward, the earnest money is credited toward the buyer’s closing costs or down payment. If the deal falls through under valid contingencies, the buyer may be entitled to a refund as long as all contract terms are met.

    What is an option fee?

    An option fee gives the buyer a defined option period, a short window of time to conduct inspections and decide whether to move forward with the purchase. During this period, the buyer can cancel the contract for any reason and only lose the option fee.

    Option fees are typically smaller than earnest money deposits, often between $100 and $500. This fee compensates the seller for taking the home off the market while the buyer performs due diligence. It’s usually non-refundable, although if the transaction closes, the fee is credited toward the final purchase price.

    Earnest money vs. option fee: A side-by-side comparison

    Feature Earnest Money Option Fee
    Purpose Shows the buyer’s commitment to purchasing the home; applied to the sales price or closing costs. Gives the buyer the right to terminate the contract for any reason during the option period; compensates the seller for taking the home off the market.
    Refundability Usually refundable if the buyer terminates during the option period, subject to contract terms. Typically non-refundable if the buyer cancels the contract.
    Application to Closing Credited toward the buyer’s down payment and closing costs. Credited toward the purchase price if the sale closes, but not returned if the buyer backs out.
    Typical Holder Held by a neutral third party, such as a title company or escrow agent. Paid directly to the seller or held by the title company and released to the seller.

    When can you cancel the contract and keep your earnest money?

    Buyers can usually cancel the contract and retain their earnest money under specific conditions outlined in the purchase agreement. The most common include:

    • During the option period: The buyer can cancel for any reason and typically recover the earnest money, although the option fee is forfeited.
    • If financing falls through: If the loan is denied despite a good-faith effort, the buyer may terminate under the financing contingency and keep the earnest money.
    • If inspection or appraisal issues arise: If the property doesn’t meet inspection or appraisal standards and no resolution is reached with the seller, the buyer can cancel under the contingency clause.
    • If the seller fails to meet obligations: If the seller doesn’t fulfill agreed-upon terms, the buyer may have grounds to terminate the contract and recover the earnest money.

    If you cancel outside these conditions or after the option period ends, you may lose your earnest money.

    Where does the money go?

    Both the earnest money and option fee are handled carefully during the transaction:

    • Earnest money: This deposit is usually delivered to the title company or escrow agent, where it remains until closing or termination. At closing, it’s credited toward the buyer’s down payment or closing costs. If the sale falls through, the escrow agent releases the funds according to the contract terms.
    • Option fee: This fee is often paid directly to the seller or through the title company, which then releases it to the seller. The option fee compensates the seller for taking the home off the market during the option period.

    Always confirm payment delivery timelines and keep receipts for both payments to avoid disputes later.

    How much should buyers expect to pay?

    Most buyers deposit between 1% and 3% of the purchase price as earnest money. For example, on a $400,000 home, that would range from $4,000 to $12,000.

    The option fee is usually smaller, typically $100 to $500, depending on the property’s price, local market conditions, and the terms negotiated between the buyer and seller.

    When are these payments due?

    Both payments are typically due within a few days of the contract being signed. Earnest money is delivered to the title company or escrow agent, while the option fee is often sent directly to the seller.

    Failure to make these payments within the agreed-upon timeframe could be considered a breach of contract, giving the seller the right to terminate the agreement.

    Tips for homebuyers

    • Follow payment timelines: Deliver both payments within the contract deadlines.
    • Keep documentation: Always request and save proof of payment.
    • Understand your rights: Review the option period and contingencies carefully.
    • Negotiate strategically: In competitive markets, a higher earnest money or option fee may strengthen your offer.

    Frequently asked questions

    1. Can I lose both my earnest money and option fee?
      Yes. If you cancel the contract after the option period ends and outside the agreed-upon contingencies, you may lose both payments.
    2. What happens if the deal falls through because of inspection results?
      If you terminate during the option period due to inspection issues, you’ll forfeit the option fee but should recover your earnest money.
    3. Who determines the amounts for these payments?
      Both payments are negotiable between the buyer and seller. Your real estate agent can recommend appropriate amounts based on local norms and current market trends.

    Making sense of earnest money and option fees

    Both earnest money and option fees play important roles in real estate transactions. Earnest money shows commitment, while the option fee provides flexibility. Understanding how these payments work, including when you can cancel and how the funds are handled, helps you make informed decisions and move forward with confidence.

    If you’re preparing to buy a home, talk with your real estate agent about appropriate amounts for each fee based on your budget and local market conditions.

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    Jasica Usman

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  • How Much Is Earnest Money in Texas? What Buyers Should Know

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    Key takeaways: 

    If you’re buying a home in Texas, you’ve probably heard the term earnest money, the deposit that shows a seller you’re serious about your offer. In most cases, earnest money in Texas ranges from 1% to 3% of the home’s purchase price, but the exact amount can vary depending on market conditions and your agreement with the seller. According to the Texas Real Estate Commission (TREC), buyers must deliver their earnest money to an escrow agent within the time frame listed in the contract; if the money isn’t delivered on time, the seller can terminate the deal or pursue remedies outlined in Paragraph 15 of the TREC contract.

    In real estate, a contract is only binding if there’s “consideration,” meaning both sides are offering something of value. In this case, the buyer’s promise to buy and the seller’s promise to sell fulfill that requirement. Because earnest money plays such a key role in this exchange, understanding how much to put down and when to deliver it can help you avoid delays or even losing out on your dream home.

    What is earnest money?

    Earnest money is a good-faith deposit that buyers include with their offer to show they’re serious about purchasing a home. It acts as a sign of commitment and gives the seller confidence that the buyer won’t back out without reason. 

    Once the offer is accepted, the earnest money is typically held in an escrow account managed by a title company or brokerage until closing. If the sale is completed, the deposit is applied toward the buyer’s down payment or closing costs. If the deal falls through for a reason covered by the contract, such as a failed inspection or financing contingency, the buyer may get their deposit back.

    When is earnest money delivered?

    In Texas, earnest money is typically due within three business days after the contract is signed; however, the exact deadline depends on the terms outlined in your purchase agreement. According to the Texas Real Estate Commission (TREC), the buyer must deliver the earnest money to the escrow agent or title company listed in the contract. If the deposit isn’t delivered on time, the seller has the right to terminate the agreement or pursue other remedies. Buyers usually submit earnest money via wire transfer, check, or money order to the title company.

    For example, if your offer is accepted on a Friday, you’ll generally need to deliver your earnest money by the following Wednesday to stay compliant with the contract terms.

    How much do you give for earnest money?

    Most buyers in Texas put down between 1% and 3% of the home’s purchase price as earnest money. For example, if you’re buying a $400,000 home, your deposit might range from $4,000 to $12,000. In a competitive market, you might offer a larger amount to stand out among other buyers; in a slower market, a smaller deposit may still be acceptable. The right amount depends on local norms, the property’s demand, and your comfort level.

    Is earnest money refundable?

    Yes, earnest money can be refundable in certain situations, depending on the terms outlined in your purchase contract. In Texas, most real estate contracts include specific contingencies, conditions that must be met for the sale to move forward. If one of these contingencies isn’t satisfied, the buyer may be entitled to a refund of their earnest money.

    Common refundable situations include:

    • Financing contingency: If you’re unable to secure mortgage approval within the agreed timeframe, you can typically cancel the contract and have your earnest money returned.
    • Inspection contingency: If a home inspection reveals significant issues and you decide to withdraw your offer within the allowed period, your deposit is usually refundable.
    • Appraisal contingency: If the home appraises for less than the purchase price and you can’t reach a new agreement with the seller, you may cancel and recover your deposit.
    • Title or seller default: If title issues arise or the seller fails to meet their obligations, buyers can often terminate the contract and get their earnest money back.

    It’s important to read your contract carefully and work closely with your real estate agent or attorney to understand your rights. Once all contingencies are met and the sale moves forward, the earnest money becomes nonrefundable and is applied toward your closing costs or down payment.

    When is earnest money nonrefundable?

    Earnest money becomes nonrefundable once all contract contingencies have been met and both parties are moving forward toward closing. At this point, the deposit shows your commitment to the purchase; backing out without a valid reason could cause you to lose that money.

    In Texas, your earnest money may become nonrefundable in the following situations:

    • You miss a deadline. If you fail to meet important timelines, such as inspection or financing deadlines, your right to a refund may expire.
    • You change your mind after contingencies are cleared. Once inspections, appraisals, and financing are approved, withdrawing your offer can forfeit your deposit.
    • You default on the contract. If you breach the terms of the agreement, for example, by failing to close on time without cause, the seller may keep the earnest money as compensation.
    • You waive contingencies. If you remove standard protections like inspection or financing contingencies to strengthen your offer, you also give up the right to recover your deposit if the deal falls through.

    At this stage of the transaction, earnest money becomes part of your financial commitment to the home purchase. Before signing, make sure you understand every clause in your contract and consult your real estate agent or attorney if anything is unclear.

    How to protect your earnest money in Texas

    Because earnest money represents a significant financial commitment, it’s important to take steps to safeguard it throughout the homebuying process. In Texas, buyers can protect their deposit by following these best practices:

    • Work with a licensed real estate agent. An experienced agent can ensure all contract terms, deadlines, and contingencies are clearly outlined and followed.
    • Verify the escrow agent or title company. Only deliver earnest money to a reputable and licensed escrow holder listed in the contract; never send funds directly to a seller or agent.
    • Pay by a traceable method. Use a wire transfer, certified check, or money order so there’s a clear record of payment and receipt.
    • Understand your contingencies. Review each contingency clause carefully, and make sure you know how and when to exercise your right to cancel if something goes wrong.
    • Get everything in writing. Always confirm changes, extensions, or releases of earnest money in writing and signed by both parties.

    By following these precautions, you’ll reduce the risk of disputes and protect your investment from potential loss. A clear understanding of the Texas Real Estate Commission (TREC) rules and your contract terms helps ensure your earnest money remains secure until closing.

    FAQs about earnest money in Texas

    Who holds the earnest money in Texas?
    Earnest money in Texas is typically held by a title company or escrow agent named in the purchase contract. They keep the funds in a secure escrow account until closing or until the contract is terminated according to its terms.

    Can you lose your earnest money?
    Yes, you can lose your earnest money if you default on the contract, miss key deadlines, or back out of the purchase after all contingencies have been cleared. Once those protections expire, the seller may keep the deposit as compensation for taking the home off the market.

    Does earnest money come off the purchase price?
    Yes, in most cases, earnest money is applied toward the home’s purchase price at closing. The deposit typically goes toward your down payment or closing costs, reducing the total amount you’ll need to bring to the closing table. Think of it as an early payment that shows the seller you’re serious about buying.

    The money remains in an escrow account until the sale is finalized; once the deal closes, it’s credited back to you as part of your total home purchase. However, if the transaction falls through for a reason not covered by your contract, the seller may be entitled to keep the earnest money as compensation for lost time or opportunity.

    What to remember about earnest money deposits

    Earnest money plays a key role in every Texas home purchase; it shows your commitment and helps the seller feel confident moving forward. While it’s usually refundable under specific conditions, understanding when it becomes nonrefundable and how to protect it is crucial. By working with a licensed real estate agent, reviewing your TREC contract carefully, and meeting all deadlines, you can make sure your deposit stays secure and goes toward your dream home when it’s time to close.

     

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    Jasica Usman

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  • 14 Tips for First-Time Homebuyers, Straight From Reddit Homeowners

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    Buying your first home is a thrilling and often overwhelming process. Whether you’re buying a home in Seattle, WA or a house in Los Angeles, CA, there’s a lot to consider from the initial tour to signing the final paperwork. 

    For a first-person perspective, Redfin reached out to homeowners on Reddit to ask the one thing they wish they’d known before buying their first home. From shopping around for the best mortgage rate to talking with neighbors to get the inside scoop on the area, these Reddit-sourced tips will help you feel more confident as you step into homeownership.

    1. Shop aggressively for rates

    It’s easy to get caught up in the excitement of getting a loan, but make sure you shop around, as this Redditor advises.

    bespoketranche1: “I wish I would’ve shopped for rates aggressively. We were so caught up on finding the right home, that we missed an opportunity to get a lower rate and save ourselves hundreds each month.”

    2. Introduce yourself to the neighbors

    Before putting an offer in, be a good future neighbor and knock on some doors in your neighborhood to get the insider scoop.

    Rorschach_1: “Knock on all the neighbors’ doors and introduce yourself as a potential buyer as a way to ‘find out.’ Know traffic patterns, East, West, where the sun sets/rises, wind, etc.”

    3. Set plans and boundaries for DIY renovations

    If planning on doing maintenance yourself, talk with any other parties living in the house to confirm expectations and boundaries around the work.

    Professional-Cap-822: “We bought an old, beautiful bungalow with plans to do a lot of updates. My husband wanted to do the work himself. I didn’t grow up in houses we owned, so I knew nothing of renovations. 

    I wish I had known to talk through what he had planned, what it would cost, and how long he thought it would take. Folks should also really consider whether they are okay in living through the mess. And they should make agreements about boundaries around projects.”

    4. Find joy in the process

    Buying a home can be exciting and stressful. Try to find joy whenever you can, as this Redditor explains.

    LongSupermarket2646: “I’m in the industry, and there’s a laundry list of what people should know before buying a home. It’s become one of the most stressful things you’ll do in your lifetime, and it can cause a divorce if you have a hard time finding the joy, happiness, and excitement of what you’re accomplishing – even when small delays may happen. It’ll be the best reward for everyone involved in your transaction.”

    5. Know that an inspection might not catch everything

    Although home inspections can catch a lot before you close on the house, be prepared that some things can sneak past a standard inspection.

    Ykohn: “I wish I’d known how much can hide outside a standard inspection. Things like sewer lines, drainage, or an undersized electrical panel can cost a fortune later, but don’t always show up on the report.”

    Another Reddit user agreed that they’d have extra inspections done if they could go back in time.

    Magnificentbunny_: “I wish we’d listened to the inspector and gotten all those extra inspections like roof, plumbing, etc. We didn’t realize we could have just gotten people to come out and give us an estimate for fixing those things. You don’t necessarily have to ‘pay’ for more inspections.”

    6. Understand your full monthly payment

    When buying a home, your monthly housing expenses aren’t just limited to the mortgage. You’ll also be paying taxes, insurance, and HOA fees.

    LetMany4907: “Understanding how mortgage rates and closing costs impact monthly payments would’ve saved me a headache. I focused on the sticker price but ignored the long-term payment picture. Running numbers multiple ways and factoring in taxes, insurance, and HOA fees is critical before signing.”

    7. Hire an arborist if you have mature trees

    It can get expensive quickly if you need to have an arborist out to look at your trees. Try to plan ahead before closing on the home.

    LackVegetable3534: “If the property has a lot of mature trees OR any trees of heaven, have an arborist check everything out. The trees of heaven and any sick or diseased trees will need to be removed, and that is expensive and should be part of your negotiations.”

    8. Expect the unexpected and work with people you trust

    For this Reddit user, it doesn’t hurt to be overprepared and have a rainy day fund in case things come up during your first few months of owning a home.

    Civil-Shelter9892: “I’ve been a realtor for 20+ years, and the first thing I would say is expect the unexpected. In my experience, things often come up that were not found in the inspection or not what the buyers were expecting. Make sure to have some remaining funds or a rainy day fund for the unexpected. Something will come up!!

    Work with people who you trust and respect. This is often the most important financial decision you will make, usually up until that point. Work with people who have your back. Your mortgage broker, realtor, lawyer, and anyone else like an inspector or contractor are supposed to be there for you. Surround yourself with good people. Don’t just use someone because they are your cousin or because your mom used them; find someone who you feel will help you in what can be a stressful yet exciting time!”

    Another Reddit user made sure to drive home the importance of being prepared for hidden costs.

    Widelyesoteric: “Buying a house has a lot more hidden costs associated with it than you know. Governments can change laws. Increase taxes. Design requirements. Repairs. Weather damage. Theft. Bad neighbors.

    You don’t just buy a house. You get the homeowner experience. Good and the bad.”

    9. Consider fire and flood activity

    With the increase in fires and floods in recent years, where you choose to purchase a home can also affect your insurance options and costs.

    Poptart4u2: “If I had known that insurance companies could cancel based on new fire and flood activity, I would have been more careful in selecting the location of my new home. Lucky for me, so far so good, but I do live in a high-fire area in Southern California and that could change at any time. I know people close to my location who have had their insurance go up by thousands of dollars, which of course, made their mortgage go up too. Now their mortgages are too expensive for them to afford.”

    10. Take your time to explore each step of the process

    Although it’s exciting when you find a home you like, make sure you’re going through each step carefully, as this Redditor touches on.

    Pale_Natural_7261: “I think that during the buying process – some are jumping really quickly because they found the right house. I think it’s really important to take time to understand the process. How long is it going to take from offer to closure? What type of issues come up if buying an old house vs new build? How do I build the right team to buy a house? Is a realtor enough? Should I use my brother to do the inspection (the answer is always no), etc. There are so many aspects of homeownership that are overlooked, and sometimes even with the best intentions forward, there is not enough time to explore all the aspects. I think one thing that is definitely doable: be curious, ask questions, not just about where and the price, but how!”

    11. Question anything that looks out of the ordinary

    When doing a walkthrough of the house, make sure to point out anything that looks strange. Don’t be afraid to ask questions.

    skoltroll: “Do a detailed inspection yourself. Why is that ceiling cracked? Can you prove when the mechanicals were last serviced/upgraded? How old is the roof? What are these water stains? Does the insulation in the attic look good? Compare disclosure to what you see. Is it downplaying issues? Is the grading of the land outside going away from the foundation?

    This may not change your mind on the purchase, but it should put you in a solid place to know what you’re buying, and know what you’re willing to accept as far as future maintenance.

    tl;dr: Screw cosmetic updates. Prove the basics are solid.”

    For one Reddit user, looking under a suspiciously placed dish towel could have saved a headache down the line.

    FewTelevision3921: “To look under the decorative dish towel, laying lovingly over the edge of the countertop, that when not there after buying allowed me to see that there was a 3 inch chunk of laminate missing underneath.”

    12. Buying early can help you build equity

    If you can afford it, buying a home early can help you start building equity instead of paying rent instead of paying rent without a future return.

    Simple-Airport1357: “I wish I had bought my first home years before I did. Instead, I spent my 20’s renting and paying someone else’s mortgage. When I did the math, I realized I paid over $500,000 in rent in that decade. That’s half a million dollars I’ll never get back.”

    13. Make sure to include the little things in your inspection

    Aside from the bigger systems getting checked, it’s easy to overlook the smaller things like windows not opening, as this Redditor explains.

    ansibley: “Just sold my departed mother’s house. Her inspector had me repair a window that didn’t stay up correctly. So I just assumed when I found a new house this month that my inspector would do that, too. Nope. Don’t forget the little things amongst the big systems checked! The house I just closed on today I found out a few hours later had only 5 of 11 windows that I can open.”

    14. Check any storage rooms or garages during the final walkthrough

    Before closing, make sure you check any place where unwanted items could be stored. There might be something hiding in the garage you don’t want to deal with.

    RTMichigan24: “Always check the garage & any storage rooms on the final walkthrough. People are lazy and put their old stuff there instead of the curb..”

    Bottom line: you can’t be overprepared

    When it comes to first-time homebuying, it’s always helpful to be overprepared. Don’t be afraid to ask questions during the process to ensure you’re getting correct information and nothing is getting swept under the rug. Homebuying can be stressful, but being prepared can help mitigate that stress and the chances of anything unexpected coming up in the future.

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    Jeremy Steckler

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  • What Is “Close of Escrow”? Timeline, Process, and What To Expect

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    When you buy or sell a home, the close of escrow is one of the most important steps in the process. It’s the point when the sale is finalized, funds are disbursed, all necessary documents are signed, and the deed is recorded, officially transferring ownership from the seller to the buyer.

    While it may sound straightforward, reaching this stage involves multiple deadlines and responsibilities for both parties, as well as coordination with the lender and escrow officer. Understanding how close of escrow works and what to expect ensures a smooth transition from contract to homeownership. 

    What does “close of escrow” mean?

    Escrow is a neutral arrangement in which a third party – often a title company or escrow company – holds money, documents, and possibly other assets until both buyer and seller meet all obligations of the contract.

    The close of escrow is the moment when the transaction is officially complete. At this stage, all contractual obligations have been fulfilled, funds are disbursed, the deed is recorded, and the buyer becomes the legal owner of the property. It serves as the final checkpoint between signing the purchase agreement and taking possession of the home.

    Escrow closes when:

    • The buyer’s lender funds the loan.
    • All required payments, including closing costs, are collected and distributed.
    • Both buyer and seller have signed all necessary documents.
    • The deed is officially recorded with the county or local jurisdiction.

    Once escrow closes, or “ends,” the seller receives payment, the buyer becomes the legal owner of the property, and the escrow account tied to the transaction is closed.

    Are the close of escrow and the closing date the same?

    These terms are often used interchangeably, but close of escrow and closing day don’t always mean the same thing.

    • Closing date is the date specified in the purchase agreement when the parties agree to finalize the sale. On this day, buyers and sellers typically sign their closing documents.
    • Close of escrow is the legal completion of the process, when funds are disbursed and the deed is recorded.

    In many cases, these steps occur on the same day. In others, escrow may close a day or two later, depending on local practices and recording times. For instance, all necessary materials might be exchanged ahead of time before the title transfer, so escrow technically closes before the official closing. In that case, the buyer could receive the title without the seller even needing to attend the final closing.

    Some states follow a “wet” closing, where funds are transferred and documents signed at the same time, while “dry” closings allow escrow to close once all requirements are met except for the disbursement of funds. Knowing which type is standard in your state is important, since it affects when the title and funds officially transfer – always check with your agent or escrow officer.

    Timeline and process of closing escrow

    The escrow process typically lasts 30 to 45 days from the time an offer is accepted to closing escrow. A cash purchase can be much quicker, often closing in as little as one to two weeks.

    While timelines vary by state and lender, here’s how the escrow process generally unfolds:

    1. Offer accepted and escrow opens

    Once the purchase agreement is signed, escrow is officially opened. The buyer deposits earnest money into a neutral escrow account, and the escrow or title company begins preparing necessary documents and coordinating the next steps, such as ordering a title search and outlining the timeline for the transaction.

    2. Title search and insurance

    The title company verifies that the property has clear ownership and no liens or claims, and prepares title insurance for both the lender and buyer.

    3. Loan processing and contingency period

    The buyer finalizes their mortgage application while the lender orders an appraisal to confirm the property’s value. The buyer also completes inspections, and any issues discovered, such as necessary repairs, are negotiated. Other contingencies, like financing or the sale of the buyer’s current home, are addressed.

    4. Final loan approval and disclosures

    The lender issues final approval, often called a “clear to close,” and delivers the Closing Disclosure, which details all costs and the exact cash needed to close. By law, this disclosure must be provided at least three business days before signing.

    This step generally signals that the escrow process is entering its final phase, with the transaction fully prepared to move toward closing.

    5. Final walkthrough

    The buyer inspects the home to confirm it is in the agreed-upon condition and that any requested repairs are complete. Usually, this occurs the day before closing day.

    6. Closing day/signing appointment

    The buyer and seller sign all required documents, including loan papers, the promissory note, the deed, and any affidavits or disclosures required by law. The buyer wires pays their down payment and closing costs, typically by cashier’s check or proof of wire transfer.

    7. Funding, recording, and verification

    In most transactions, the lender wires loan funds to escrow on the same day, and escrow confirms that all payments – including the buyer’s funds, lender funds, and closing costs – are received. The deed is then recorded with the county, legally transferring ownership to the buyer.

    8. Disbursement and close of escrow

    Escrow distributes funds to the seller, agents, and other parties, completing the transaction. Keys are delivered according to the contract, marking the official close of escrow.

    Why the close of escrow matters in your real estate transaction

    The close of escrow is the point at which a real estate transaction is officially complete. It ensures that both buyer and seller have met all contractual obligations, funds are properly disbursed, and the deed is recorded with the county, legally transferring ownership.

    This step protects everyone involved: buyers can be confident the property is free of liens, and sellers know they will receive their proceeds. It also triggers post-closing processes, like setting up an escrow account for taxes and insurance. In short, close of escrow turns the contract into reality, marking the legal transfer of the home and the conclusion of the transaction.

    FAQs: Close of escrow

    Can escrow close early?

    Yes, if all conditions are met, documents are signed, and funds are ready, escrow can close earlier than scheduled. Early closing requires coordination among the buyer, seller, lender, and escrow officer. However, closing escrow early doesn’t necessarily mean you’re able to move in sooner – always confirm with your agent and escrow officer.

    What type of issues can occur during close of escrow?

    Several issues can delay or complicate the close of escrow. Common problems include last-minute title or lien issues, appraisal or inspection discrepancies, incomplete repairs, missing documents, or delays in lender funding. Any of these issues may require additional negotiation, documentation, or an escrow extension to resolve before the transaction can be finalized.

    What happens if funding is delayed?

    If the lender doesn’t wire funds on time, closing is postponed until the money is received. This can affect recording and key delivery, so the buyer doesn’t officially own the home until escrow is fully closed.

    What happens if the closing date changes?

    Closing dates can be moved up or pushed back if all parties, including the lender and escrow officer, agree. Even if escrow closes early, possession and key delivery may still follow the terms outlined in the purchase contract.

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    Mekaila Oaks

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  • Letter to Seller of Home: How to Write One That Stands Out

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    Key takeaways:

    • A letter to a seller of a home can help your offer stand out in a competitive market.
    • Focus on genuine connection and financial readiness, but avoid personal details that raise Fair Housing concerns.
    • Use clear, professional wording, and keep your letter short and focused.

    Buying a home is still competitive, even if not as frenzied as during the pandemic’s peak. A common misconception is that 26% of buyers are facing bidding wars — but according to the National Association of Realtors, that figure actually represents the share of buyers who paid all cash for their homes in late 2023 and early 2024. While bidding wars have cooled, competition remains: recent reports show that around 20% of homes nationwide received multiple offers in mid-2025. One way to stand out in today’s market is by writing a “buyer love letter,” a short note to the seller that explains who you are, why you love the home, and why they can feel confident choosing you. This Redfin real estate guide will walk you through how to write the perfect note to the seller without being too over-the-top.

    Why writing a letter to a home seller matters

    Even in today’s cooler market, competition is still real. Writing a personal letter to the seller can give your offer an edge by creating connection, showing sincerity, and boosting seller confidence.

    • Connection: Sellers often want to know their home will be appreciated.
    • Differentiation: In a multiple-offer situation, a letter can humanize your offer.
    • Confidence: Expressing financial readiness can reassure sellers.

    What to include in your letter to the home seller

    When crafting your buyer letter, keep it personal yet focused. Including the right details can help sellers connect with you while also showing that you’re a serious and prepared buyer. Here’s what your letter should include to accomplish that: 

    • A warm introduction and brief information about who you are.
    • Specific details about what you love about the home.
    • How do you see yourself living there?
    • A short note on your financial preparedness.
    • A polite thank-you.

    What not to include in a letter to a home seller

    Realtors sometimes warn against personal letters because of Fair Housing Act concerns. Sharing too much personal information — such as family status or religion — could create bias and potential liability. To stay safe:

    • Avoid mentioning protected characteristics (race, religion, marital status, etc.).
    • Keep the letter focused on the house and your ability to purchase.
    • Don’t compare your offer to others or pressure the seller.

    Step-by-step guide: How to write a letter to a home seller

    1. Start with a greeting (e.g., “Dear [Seller’s Last Name] Family”).
    2. Introduce yourself briefly without including personal details that raise fair housing risks.
    3. Mention specific features you admire about the home.
    4. Express how you envision living there.
    5. Highlight your seriousness and financial readiness.
    6. End with gratitude and a polite closing.

    Sample letter to a home seller

    Formal option:

    Dear [Seller’s Last Name] Family,

    Thank you for taking the time to consider my offer on your home. From the moment I visited, I was impressed by the abundance of natural light in the living room and the warmth of the backyard. I can easily imagine creating a lasting home here and truly appreciate the care you’ve put into maintaining it.

    Please be assured that I am financially prepared and ready to move forward without delay. I have already secured pre-approval from my lender, which means I can move quickly and confidently through the closing process. My goal is to make this transition as smooth as possible for you.

    I am grateful for your consideration and the opportunity to present my offer.

    Sincerely,
     [Your Name]

    Friendly option:

    Dear [Seller’s Last Name] Family,

    I truly enjoyed walking through your home—it immediately felt welcoming. The open kitchen and cozy fireplace especially stood out to me, and I can already picture hosting friends and sharing special moments there. I love the idea of creating a home filled with warmth, laughter, and lasting memories.

    I also want you to know that I’m fully prepared to move forward financially. I’ve secured mortgage pre-approval and am ready to take the next steps quickly, making the process as smooth and stress-free as possible for you.

    Thank you so much for considering my offer.

    Best,
     [Your Name]

    How do you say thank you to a seller of a home?

    Keep it simple and professional. A short line such as “Thank you for your time and consideration of my offer” is polite and effective.

    FAQs

    What is a love letter to the seller of a house?
    A love letter to the seller of a house is a personal note from the buyer to the seller that explains why the buyer loves the property and wants to purchase it.

    Do seller letters actually work?
    Yes, they can. A letter won’t replace a strong financial offer, but it can make you more memorable in a competitive market.

    Why do realtors warn against writing personal letters to home sellers?
    Because sharing personal details may risk Fair Housing Act violations. It’s best to keep your letter focused on the home and your financial readiness.

    How do you write a letter to a home seller?
    Keep it short, professional, and focused on the home. Mention what you love about the property, express your readiness, and thank the seller.

    Should I send a letter with every offer?
    Not always. Some sellers prefer not to receive letters, and some agents discourage them. Ask your real estate agent what’s best for your situation.

    Wrapping up: Writing a letter that works

    A letter to the seller of a home can give your offer a human touch, but it should always be professional, brief, and focused on the property. By striking the right balance, you can stand out in a competitive market without creating risk.

     

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    Jasica Usman

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  • Is Earnest Money Refundable? When You Can (and Can’t) Get It Back

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    When you make an offer on a home, you’ll usually include earnest money – a good-faith deposit between 1% to 3% of the purchase price that shows you’re committed to the purchase. If the sale goes through, it’s applied to your down payment or closing costs. But what happens if the deal falls apart – is earnest money refundable?

    Short answer: Yes, earnest money can be refunded, but only if contingencies in your contract cover the reason the deal didn’t close.

    This Redfin real estate article will explain when you can expect to get your earnest money back, when you might lose it, and how contingencies safeguard your deposit.

    When is earnest money refundable?

    Earnest money is typically refundable if the buyer backs out of the deal for a reason covered by contingencies in your purchase agreement. These clauses are designed to protect your deposit, but they only apply if you meet the required deadlines and uphold your end of the contract.

    Here are a few common scenarios when a buyer can usually expect to get their earnest money refunded:

    1. Home inspection uncovers major issues

    If the offer includes a home inspection contingency and the inspection reveals serious problems, like foundation damage, mold, or an outdated electrical system, the buyer can back out of the deal within the inspection period. This allows them to have their earnest money refunded while avoiding a home with unexpected and costly issues.

    2. Buyer is unable to secure financing

    A financing or mortgage contingency protects buyers who are unable to secure a home loan. Even with pre-approval, unexpected financial changes or lender decisions can prevent final approval. When this contingency is in place, the buyer can typically back out of the deal and have their earnest money refunded.

    3. The home appraises for less than the purchase price

    An appraisal contingency lets buyers back out of the contract if the home appraises for less than the offered price and the seller refuses to adjust it. Without this contingency, the buyer could be responsible for the difference or risk forfeiting their earnest money if they walk away.

    4. Title issues are discovered

    During the home-buying process, a title search is conducted to ensure the property is free of ownership disputes, liens, or other legal claims. If the search uncovers unresolved issues that can’t be cleared before closing, a title contingency allows the buyer to cancel the contract without penalty. In this case, the buyer’s earnest money is refunded, protecting them from financial risk tied to hidden claims on the property.

    5. Seller backs out of the deal

    If the seller withdraws from the contract without a valid reason – such as deciding not to sell or failing to meet agreed-upon terms – the buyer is generally entitled to a full refund of their earnest money. This protection ensures the buyer isn’t penalized for circumstances outside their control and can pursue other properties without losing their deposit.

    When is earnest money not refundable?

    In most cases, earnest money becomes non-refundable when the buyer breaches the contract or backs out for reasons not covered by the agreement. Even if contingencies exist, failing to follow the contract’s requirements can result in forfeiture of the deposit.

    1. Buyer waived contingencies

    In competitive markets, buyers may choose to waive protections like the inspection or financing contingency to strengthen their offer. However, doing so limits their ability to cancel the contract without penalty. If problems arise later, the buyer may be unable to recover the earnest money.

    2. Buyer misses a deadline

    Contingencies only protect buyers within the time frames specified in the contract. If a buyer fails to complete an inspection, secure financing, or take other required steps on time, they may forfeit their earnest money – even if the reason for backing out would normally be covered.

    3. Buyer changes their mind

    If a buyer simply decides not to proceed with the purchase – whether they got cold feet, found a different property, or another reason not covered by a contingency – the seller is typically entitled to keep the earnest money deposit. This compensates the seller for time lost and potential offers missed.

    Common mistakes that can cost buyers their earnest money 

    Even when buyers include contingencies, certain missteps can still put their deposit at risk. These are often overlooked but can have real consequences:

    Failing to clarify the inspection scope

    Buyers sometimes assume that an inspection contingency covers all possible issues. If the contingency language is too vague or doesn’t include specific areas (like septic systems, pools, or roofing) and specialty inspections, the buyer may be unable to back out for problems discovered later.

    Not fully understanding appraisal conditions

    Appraisal contingencies may only allow the buyer to cancel if the home appraises below a specific threshold. Buyers who don’t confirm the terms may assume they’re protected for smaller discrepancies or negotiation gaps, and lose their earnest money deposit if the seller refuses adjustments.

    Failing to properly request deadline extensions

    Even if a buyer has valid reasons for needing more time – such as completing inspections or securing financing – missing a contingency deadline without a formally approved extension can be treated as a contract breach. This mistake can result in forfeiting the earnest money, even when the underlying reason for the delay is legitimate.

    Assuming seller delays or mistakes automatically protect the deposit

    Buyers sometimes believe that if the seller misses a deadline, they can cancel without consequence. Most contracts include provisions outlining how buyer deadlines are affected by seller actions, and misreading these can result in losing the deposit.

    How buyers can protect their earnest money

    Buyers can take several steps to keep their earnest money refundable and reduce the risk of losing it. Staying organized, following the purchase agreement, and documenting each step can help ensure the deposit remains secure.

    Key steps include:

    • Include clear contingencies in the contract
    • Meet all contract deadlines for inspections, financing, and other contingencies.
    • Document everything in writing, including contract changes, deadline extensions, etc.

    For example, a buyer who completes inspections late without requesting an extension could lose their deposit even if serious issues are found.

    FAQs: Earnest money and refunds

    Do buyers always have to put down earnest money?

    No, earnest money isn’t legally required, but in most markets, it’s standard practice. Without it, the offer may appear less serious, and the seller might choose a buyer who includes a deposit.

    When is earnest money due?

    Typically within 1-3 business days after the seller accepts the offer, as specified in the purchase agreement.

    Where does earnest money go?

    Held in a neutral escrow account, the deposit is applied to the buyer’s down payment or closing costs if the sale closes.

    What happens if I accidentally miss a deadline in the contract?

    Failing to meet deadlines can breach the contract, putting the earnest money at risk. The seller may have the right to keep the deposit if the buyer fails to meet the agreed-upon terms.

    Can a buyer extend a contingency deadline to protect their earnest money?

    Yes. Most purchase agreements allow buyers to request extensions for inspections, financing, or other contingencies. To protect the earnest money, the extension must be documented in writing and agreed to by the seller. Missing a deadline without a formal extension could result in forfeiting the deposit, even if the reason for the delay is valid.

    What happens if the inspection contingency expires?

    If the inspection contingency expires and the buyer hasn’t raised concerns or formally requested an extension, the right to cancel based on inspection findings is lost. At that point, backing out of the deal due to inspection issues would likely be considered a breach of contract, and the buyer could forfeit their earnest money deposit.

    When can the seller keep the earnest money deposit?

    The seller can keep the earnest money if the buyer cancels the contract for a reason not covered by contingencies, fails to meet deadlines, or defaults on the agreement.

    How can I get my earnest money back?

    To receive a refund, the buyer must cancel the contract according to the terms of a valid contingency and do so within the specified timeframe. The escrow holder will release the funds once both parties sign a release agreement or the cancellation terms are legally resolved.

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  • Why are mortgages so expensive in Canada? – MoneySense

    Why are mortgages so expensive in Canada? – MoneySense

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    A total of three rate cuts passed down from the Bank of Canada since June have cumulatively lowered the cost of borrowing for Canadians by 75 basis points, from 5% to 4.25%, offering home buyers some much-needed relief in terms of affordability.

    This is according to the latest affordability report compiled by Ratehub.ca, which crunches the minimum annual income required to buy an average home in some of Canada’s major cities. (Ratehub Inc. owns both Ratehub.ca and MoneySense.) The report is based on September 2024 and August 2024 real estate data reported by the Canadian Real Estate Association (CREA). It illustrates how changing mortgage rates, stress test rates and real estate prices are impacting the income needed to buy a home. 

    The September edition (updated monthly, so bookmark this page) shows the required income lowered in 11 of the 13 housing markets studied, as the average five-year fixed mortgage rate dropped to 5.04%, compared to 5.16% in August. As a result, the corresponding average mortgage stress test rate—which tacks on an additional 2% to a borrowers’ contract mortgage rate—fell to 7.04% from the previous 7.16%.

    Let’s take a look at how that’s impacted home buyers across Canada.

    The best places to buy real estate in Canada

    Housing affordability across Canada’s major cities

    Check out the chart below to see how affordability changed between August and September in Canada’s main housing markets, based on the income required to qualify for a mortgage.

    September 2024: How much do you need to earn to buy a home in Canada?

    City Average home price in August Average home price in September Change in home price  Income required in August Income required in September Change in income
    Vancouver $1,195,900 $1,179,700 -$16,200 $224,000 $219,000 -$5,000
    Toronto $1,082,200 $1,068,700 -$13,500 $204,100 $199,800 -$4,300
    Hamilton $840,300 $831,500 -$8,800 $161,800 $158,740 -$3,060
    Victoria $866,700 $864,400 -$2,300 $166,420 $164,450 -$1,970
    Halifax $543,700 $538,100 -$5,600 $109,940 $108,000 -$1,940
    Calgary $586,100 $582,100 -$4,000 $117,360 $115,600 -$1,760
    Ottawa $646,000 $642,800 -$3,200 $127,830 $126,100 -$1,730
    Edmonton $400,200 $399,400 -$800 $84,850 $83,990 -$860
    Winnipeg $361,800 $362,500 $700 $78,140 $77,600 -$540
    Fredericton $311,300 $312,000 $700 $69,310 $68,860 -$450
    Regina $319,700 $320,700 $1,000 $70,780 $70,360 -$420
    Montreal $535,700 $543,400 $7,700 $108,550 $108,900 $350
    St. John’s $354,600 $364,100 $9,500 $76,880 $77,880 $1,000
    Data in the chart is based on a mortgage with 20% down payment, 25-year amortization, $4,000 annual property taxes and $150 monthly heating. Mortgage rates are the average of the Big Five Banks’ 5-year fixed rates in September 2024 and August 2024. Average home prices are from the CREA MLS® Home Price Index (HPI).

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    Canadian cities where affordability improved

    Where in Canada is owning a home becoming more affordable?

    Vancouver: A chilly start to the autumn market

    Vancouver topped the list of cities with most-improved affordability, largely due to the fact that the average home price absorbed a $16,200 drop from August. Make no mistake,—this is still Canada’s most expensive housing market with an average property price tag of $1,179,700. But demand has been quite cool coming out of the summer months. According to the Greater Vancouver Realtors, sales fell 3.8% year-over-year in September, while the supply of new listings rose 12.8%, leading to an easy buyers’ market. As a result, Vancouver home buyers need to earn $5,000 less than they did last month to qualify for a mortgage on the average-priced home, at an income of $219,000.

    Toronto: A month of flat sales

    The city of Toronto came in second, as home prices continue to fall within Ontario’s largest city; the average property sold for $1,068,700, $13,500 less than it did in August, according to the Toronto Regional Real Estate Board. This is largely due to the fact that sales were unchanged from the previous month (though things are improving on an annual basis, coming in 8.6% higher than in 2023). Meanwhile, fresh supply continues to flood the market with new listings, which surged 35.5% year-over-year. Combined with easing mortgage rates, the average Toronto home buyer saw their required income shrink by $4,300, to $199,800.

    Hamilton: Hovering below the historical average

    Rounding out the top three cities is Hamilton, which has long been a popular Southern Ontario real estate destination, without the million-dollar price tag that characterizes neighbouring Toronto. The average home price in Hamilton in September came to $831,500, a decrease of $8,800 from August. The Association of Hamilton-Burlington reports that while sales were brisk in September, they continue to lag 2023 levels by 4% year-to-date and remain 28% below the long-term average. Meanwhile, new listings and inventory levels continue to rise, now sitting at a cumulative five months. That’s all cooled home prices, and as a result, Hamilton home buyers need to earn $158,740 to buy a home, $3,060 less than they did in August.

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  • What is porting a mortgage in Canada—and when should you do it? – MoneySense

    What is porting a mortgage in Canada—and when should you do it? – MoneySense

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    But picking a fixed mortgage rate can be problematic if you decide to sell your house and are forced to break your mortgage contract in the middle of your term. The penalties associated with breaking a fixed-rate mortgage can be very costly. 

    Thankfully, many mortgage lenders allow you to avoid penalties by porting your mortgage, which means carrying your existing term and interest rate to your new property. 

    So, how does porting a mortgage work, and when does it make sense? 

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    What is porting a mortgage? 

    Porting a mortgage refers to taking your current mortgage and transferring it to a new property when you move. Your existing mortgage rate and term are transferred along with your current mortgage balance. 

    To qualify for a mortgage port, you must follow certain rules. For example, you must sell your home and purchase a new one at roughly the same time—usually within 30 to 120 days, depending on the lender. Also, you can’t port more than your current mortgage amount. If you need additional funds to purchase your next home, the new money will be subject to current interest rates and added to the mortgage balance—but more on that later. 

    Most Canadian mortgage lenders offer portability as an option, but not all do. That’s why it’s important to find out if a prospective lender offers this feature before you take out a new mortgage. After all, you never know when your plans might change and you need to sell your home before your mortgage term ends.

    When does it make sense to port a mortgage?

    There are two main reasons you would want to port your mortgage instead of breaking your contract and starting fresh. The first is to keep your existing interest rate if it’s lower than current mortgage rates. The second is to avoid breaking your mortgage early and incurring a costly penalty. 

    “Porting is typically a good idea if your existing fixed mortgage rate is lower than current rates and you’re moving before your mortgage maturity date,” explains Lyle Johnson, a Winnipeg-based mortgage broker. “By keeping your existing mortgage, you avoid the prepayment penalties that would apply if you break your mortgage before its maturity date, while keeping your low fixed rate.” 

    What about a variable-rate mortgage? Most variable mortgages do not offer a portability feature. (Note, however, that you may have the option to convert to a fixed rate first, and then port.) If you decide to sell your house before your term expires, you’ll likely need to break your contract and obtain a new mortgage for the new property. That said, the penalty for breaking a variable mortgage is usually equal to three months’ interest on your outstanding balance, which is often less than a fixed-rate mortgage penalty. 

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  • Humble’s Heatwave sale is the perfect excuse to stay inside

    Humble’s Heatwave sale is the perfect excuse to stay inside

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    The mercury is rising, but Humble is providing the ideal way to beat the heat.

    Through July 25, Humble is offering discounts on a variety of AAA and indie games with its Heatwave of Hits sale. Titles include Dragon’s Dogma 2, Cult of the Lamb, Resident Evil 4, and more. There are dozens of games to choose from, but if you need some suggestions, we’ve highlighted some of our favorites below.

    Image: Ironwood Studios

    If you ever wondered what it might be like taking a road trip through the Upside Down from Stranger Things, you should definitely check out Pacific Drive. Pacific Drive is currently on sale for $17.99 at Humble (was $29.99).

    A screenshot from Against the Storm

    Image: Hooded Horse

    A bold title that blends elements of city-building and real-time strategy with roguelite elements, Against the Storm distills the typical marathon of management sims into two-hour sessions. This title is currently on sale for $18.99 from Humble (was $29.99).

    A screenshot from Children of the Sun

    Image: Devolver Digital

    Sniping a bunch of unsuspecting targets can get a bit tricky when you only have one bullet. Children of the Sun lets you artfully string together headshots by curving your bullets, allowing you to eliminate several foes with one sublime shot. Children of the Sun is on sale for $11.99 at Humble (was $14.99).

    A screenshot from Pepper Grinder

    Image: Devolver Digital

    Pepper Grinder combines a vivid, and deliciously chunky aesthetic with innovative and fluid movement to produce what is easily the best platformer of 2024. You can pick up this title for just $11.99 at Humble right now (was $14.99).

    A screenshot from Shadow Gambit: The Cursed crew, showing an overview of the Dreadvine Cove Island, highlighting the vine covered skull that sits at the center of the map.

    Image: Mimimi Games

    Take control of an undead crew of pirates as you attempt to stealthily shank and shiv your way across the Caribbean. This stealth tactics game is witty, charming, and full of interesting tactical puzzles for your to dissect. You can pick up Shadow Gambit: The Cursed Crew from Humble for $29.99 (was $39.99).

    A screenshot of Ultros

    Image: Hadoque

    With every frame looking like a living blacklight poster, Ultros is perhaps the artistic antithesis of Hollow Knight. If you’re hunting for another awesome Metroidvania to tide you over until we get more Hollow Knight: Silksong news, you should take Ultros for a spin. You can pick up this title from Humble for $14.99 (was $24.99).

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    Alice Jovanée

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  • Is it a good time to buy a new car? – MoneySense

    Is it a good time to buy a new car? – MoneySense

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    Sticker prices at dealerships have started to come down and affordability is improving, said Daniel Ross, senior manager of industry insights with Canadian Black Book.

    “The new car market is normalizing faster than the used car market,” he said. “You have the inventory, you have the incentives depending on where you’re shopping and if you were a new car shopper from the beginning, it’s the best situation you’ve had in a long time.”

    Inventory of new cars has built up across the country as prices for newer models climbed and consumers pulled back on big purchases amid high inflation and rising interest rates. Now, manufacturers and dealerships have launched incentives and rebates as they look to clear that supply.

    On new cars, dealerships can offer internal financing from manufacturers and control the rates independently from bank rates, said Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions.

    “Instead of offering rebates, they lower interest rates which make deals better for the consumer.”

    How availability impacts car loan interest rates

    Homeowners are watching the Bank of Canada’s every move as they hope for lower borrowing rates, but a vehicle purchase works somewhat differently, said Shari Prymak, a senior consultant at non-profit Car Help Canada. When financing through a dealership, the interest rate depends on the given make or model.

    “The rates that the manufacturer sets are mainly tied to the vehicle availability,” he said.

    “If the vehicles have a very good supply, they’ll incentivize the interest rates and bring down the rates,” Prymak said. “But if the vehicle doesn’t have any supply, if it has a long waiting period, because it’s in short supply, the rates won’t be incentivized.”

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  • Where to buy a home for under $1 million in Canada – MoneySense

    Where to buy a home for under $1 million in Canada – MoneySense

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    But if you have some flexibility around where to live, there are cities and neighbourhoods in Canada where homes can be had for less than seven figures—lots of them, in fact. All but five of the 45 cities and regions analyzed by our partner Zoocasa in this year’s Where to Buy Real Estate in Canada report had benchmark prices below $1 million (as of the end of 2023).

    See the list of Canadian cities and regions below, in order of most to least affordable (followed by neighbourhood data for Toronto and Vancouver). You can sort the data in each table by tapping on the column headers, or filter results using the last row. You can download the data to your device in Excel, CSV and PDF formats. 

    Canadian cities and regions with a benchmark price under $1 million

    Prohibitively high prices around Greater Toronto and B.C.’s Lower Mainland can obscure the fact that the national average home price was a tad under $735,000 in 2023, according to the benchmark Zoocasa used in its analysis.

    And even in the regions with benchmark prices above the $1-million threshold, the survey demonstrates there are more affordable neighbourhoods to be found. It should be noted our statistics do not differentiate between housing types, so don’t expect to find detached homes for these prices in these cities. But it’s still possible to get a toehold in the market with a condo or townhouse for less than $1 million, sometimes a lot less.

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    Where to get a home for less than $1 million in Toronto

    Our survey turned up no less than 106 neighbourhoods in the city of Toronto with benchmark prices below $1 million—the most affordable being Tandridge, with a benchmark price of just $484,269.

    Toronto neighbourhoods

    With prices like those, you might assume there’s something wrong with these neighbourhoods. Consider that a lot of them are coming up in the world. Tandridge, along with Rivalda Heights, Keelegate, Humbergate, Cook Village, Duncanwoods, Morningside, Woodbine Downs, South Steeles, Glenfield, Chapel Glen, Dorset Park, Glen Long and Mount Olive have all seen price appreciation of 50% or more over the past five years. Yorkwoods and University Village have both gone up more than 80%, and Beaumond Heights, an astonishing 113%!

    Beyond those in the city of Toronto, we count an additional 65 neighbourhoods across the Greater Toronto Area where the benchmark price was below $1 million at the end of 2023.

    Greater Toronto Area neighbourhoods

    How much would a typical home in Toronto’s Tandridge neighbourhood cost you in monthly mortgage payments? Using a mortgage payment calculator, we find that with the minimum down payment of $24,213 and a mortgage of 25 years, you’d be looking at a monthly payment of $2,685—based on the lowest available five-year fixed mortgage rate on June 13. Add in taxes, insurance and fees, and you’d need a total of $40,706 in cash to close the deal. With 20% down ($96,854), the monthly payment would be $2,240 on a 25-year amortization.

    Where to get a home for less than $1 million in Vancouver

    In the city of Vancouver, which represents less than one-quarter of the Metro Vancouver population, we counted just six enclaves with benchmark prices under $1 million.

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    Michael McCullough

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  • How much income do I need to qualify for a mortgage in Canada? – MoneySense

    How much income do I need to qualify for a mortgage in Canada? – MoneySense

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    Fredericton: Home prices poised to rise with rate cuts

    Fredericton marks the third and final city where the additional required income to purchase a home remains below $1,000. The average home price there rose $2,600 on a monthly basis to $292,900, which pushed the minimum income up by $430, to $68,170. According to CREA, Fredericton home sales declined 15.2% over the course of the month.

    This reflects real estate trends in New Brunswick as a whole, as home prices have steadily increased over the past three months. This is mainly due to shrinking supply, as new listings remain 12.1% below the five-year average for March. However, sales and supply could be poised to perk up should interest rate cuts materialize later this summer.

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    The least affordable places to buy in Canada

    Toronto, Hamilton and Vancouver sit at the bottom of the list.

    Toronto: The toughest place to buy a home in March

    It should come as no surprise that Toronto home buyers are the most financially squeezed; home prices there escalated sharply over the pandemic’s lockdown years, and remained elevated at an average of $1,113,600 in March, up $19,700 from February. That resulted in the average buyer needing an annual income $3,400 higher than they did in February, making it now $217,500.

    While home sales have chilled slightly at the start of the year, the Toronto Regional Real Estate Board (TRREB) says enough competition remains in the market to push prices higher, and that this will only tighten further as interest rates start to decline.

    Source: Ratehub

    Hamilton: Another challenging Golden Horseshoe market

    The City of Hamilton—which boomed in popularity in recent years as a real estate destination—came in second in terms of worsening affordability. The average home price does remain under the $1-million mark, making it a much more affordable option when compared to neighbouring Toronto. But that gap is narrowing sharply, up by $14,600 in March to an average of $850,500. In terms of income, a Hamilton buyer needs to earn $169,640 annually, an increase of $2,540.

    Vancouver: Softening sales, but demand still drives prices

    The City of Vancouver remains Canada’s most expensive housing market, with an average price of $1,196,800 in March, up $13,500 from the previous month. As a result, a buyer there must earn $232,620 in order to qualify for the required mortgage, an increase of $2,270 compared to February.

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  • How to buy the best washing machine and dryer to save money and the environment – MoneySense

    How to buy the best washing machine and dryer to save money and the environment – MoneySense

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    Is it secondhand? 

    A secondhand washing machine? Yep! Buying a model that is energy efficient and secondhand gives you the power and water-saving benefits down the road, but you are also offsetting the footprint you would have gained from manufacturing and transporting a new machine. 

    Does it have certifications to back it up? 

    As always, you want to be on the lookout for greenwashing companies and have the certifications to back up their eco-friendly claims (this goes for dryers, too, by the way). When buying an eco-friendly washer and dryer, consider certifications like Energy Star. AAFA-certified washers also use steam to remove bacteria and dust mites from your clothing; this can be an excellent alternative for anyone with allergies and sensitivities to the toxins in laundry detergent. 

    What do reviewers say? 

    I always check the reviews before I buy anything these days. And when doing so, you must consider what is important to you. For example, when reviewing reviews of front-load washers (most eco-friendly washers are front-load), one of the most common complaints is that they tend to develop mildew and a smell faster than top-load agitator washers. While annoying, you can always use a green cleaner to clean your front-load washer and combat smells.

    Does the company have transparent reporting? 

    Be on the lookout if the company you buy from has transparent reporting for their scope 1, 2, and 3 emissions. LG and Samsung are two examples of companies that sell efficient washing machines and are also on the reputable side for reporting carbon emissions. 

    Is it too big or too small? 

    Every eco-washing machine has a different width and drum capacity; larger drums use more water and energy with each load. If you have a large family and do laundry quite often, you might opt for a larger size. But stick to a smaller size if you are just one person, and you must fill up your washer to the top before running it. 

    Am I buying to buy? 

    As I mentioned, a considerable portion of washing machines’ environmental impact comes from the unit’s manufacturing and delivery. Remember, the second R in the nine Rs of Zero Waste is “refuse.” [The other eight include: rethink, reduce, reuse, renew, recycle, responsibility, replant and restore.] This means that even if you buy a new efficient washing machine, the energy and water savings you will gain might not make up for the emissions produced to get it to your home in the first place. So, with that in mind, only buy a new machine if your old one is beyond repair. 

    Will it need replacing soon? 

    I recommend checking out the manufacturer’s repair and warranty policies before you purchase an eco-washing machine. From an environmental standpoint, repairing something broken is always better than buying new ones! For context, a good-quality washing machine should last between seven and ten years. 

    What about dryers? 

    When shopping for an eco-friendly dryer, remember that 88 million dryers in the U.S. alone emit over a ton of carbon dioxide annually, equivalent to approximately the emissions produced by driving a car for around 4,800 miles. 

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  • Home buyers thought mortgage rates were finally going to go down. Why hasn’t it happened yet?

    Home buyers thought mortgage rates were finally going to go down. Why hasn’t it happened yet?

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    Why are mortgage rates still so high?

    After a year of mortgage rates near 8%, home buyers are eager for good news. Some forecasters have buoyed their hopes, estimating that the rate on the 30-year mortgage will drop to 6% or lower this year. 

    But rates have not fallen by much thus far. The 30-year rate is currently averaging 6.64%, according to Freddie Mac. That’s despite the fact that the U.S. Federal Reserve hasn’t raised its benchmark interest rate since July 2023 and signaled in December that it would cut that rate in 2024. Meanwhile, economists in the real-estate sector have been anticipating a drop in mortgage rates since last fall.

    “Homebuyers may be feeling like the lower mortgage rates they’ve been promised in 2024 are not materializing,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. In a recent survey of Americans’ feelings about the housing market, 36% of respondents said they expect mortgage rates to fall in the next 12 months.

    While the Fed doesn’t set mortgage rates, it can influence them, just as it influences the overall U.S. economy through monetary policy. But even though the central bank has hit the brakes on tightening monetary policy, with the economy giving off mixed signals of strength and weakness, the timing of anticipated cuts to the benchmark rate remains unclear.

    That in turn creates uncertainty about when mortgage rates will drop enough to “unfreeze” the housing market. Home buyers are probably going to have to wait until the Fed acts definitively before they see those lower rates.

    The effect of a strong economy

    The strength of the U.S. economy is one reason mortgage rates have not yet fallen much, economists say. The job market is still hot, and inflation remains higher than the Fed’s goal, which is why the latest read on inflation, out Feb. 13, will be so closely watched. The fact that rates haven’t fallen this year is “a result of uncertainty about the economy and the timing of the Fed’s rate cuts,” Sturtevant said.

    “The strong job market is good news for the spring buying season, as higher household incomes are a necessary component, but it also means that mortgage rates are not likely to drop much further at this point,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, told MarketWatch.

    Another reason mortgage rates are still high is that lenders are trying to protect themselves against lower rates in the future, Cris deRitis, deputy chief economist at Moody’s Analytics, told MarketWatch. If rates fall, lenders run the risk that a borrower will pay off a loan early by refinancing. That would limit how much in interest that lender could expect to make.

    “In an odd sort of way, then, the expectation that mortgage rates will be lower in the future can lead lenders to increase rates today to compensate for the prepayment risk,” deRitis said. 

    Lower rates, more competition among buyers

    So when can prospective buyers expect mortgage rates to fall significantly? 

    “Homebuyers should expect mortgage rates to move lower as we head through 2024,” Sturtevant said. While Fannie Mae expects rates to fall below 6% by the end of the year, other economists, like Fratantoni, expect the 30-year rate to finish the last quarter of 2024 at 6.1%.

    But even if rates do fall, that won’t necessarily mean buyers will be better able to afford a home, because a drop in rates could heat up competition for homes even as it boosts buyers’ purchasing power.

    “There is still very low inventory in the market, and buyers need to act quickly when they find the right home for them,” Sturtevant said.

    For the many homeowners who currently have a mortgage rate below 4%, rates stuck in the 6% range may be leading them to put off plans to sell their home and buy a new one.

    But it’s worth noting that since 2000, rates on 30-year mortgages have ranged from a high of about 8.62% to a low of 2.81%, averaging about 5% over that span. And compared with the historical average of the 1970s, which was 7.7%, the current rates in the 6% rage are not that high, deRitis noted.

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  • Buying your first car in Canada: Insider tips from a salesperson – MoneySense

    Buying your first car in Canada: Insider tips from a salesperson – MoneySense

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    Can you negotiate interest rates on car loans? 

    If a car is in stock, and you have a good credit score, you might be able to negotiate a good interest rate for your loan—the salesperson may be more willing to make a deal to sell a car already on the lot. On the other hand, dealerships can also mark up the prices of cars, and buyers may be willing to pay more for the convenience of getting one sooner. Doing your research is the only way to know if you’re paying a fair price. 

    Pay off your car loan faster

    Whenever you come into extra money, such as birthday gifts or work bonuses, consider paying off your car faster. Many car loans are open loans, allowing you to make additional payments or settle the loan in full anytime without penalties or fees. (Confirm with your lender.)

    Common car sales tactics to watch for

    Upselling

    The salesperson might attempt to upsell you on additional features and accessories. If you’re financing or leasing the car, they’ll likely focus on the monthly or bi-weekly payment increase rather than the total cost. They might say, for example, that adding features X and Y will increase your bi-weekly payment by just $15—about the cost of a Big Mac combo. (I’ve used this line myself, and yes, it worked.) Doesn’t sound like much, right? But consider whether the upgrade will fit your budget. Let’s say you’re fully financing a $30,000 vehicle in Ontario. The cost with 13% HST would be $3,390. If you signed a six-year loan with an interest rate of 7.48% and made bi-weekly payments, the total interest would be $8,222.21. If you added a feature or an upgrade that cost another $15 per bi-weekly payment, that would add $2,340 to the cost of the car, plus $641.33 in interest over the life of the loan.

    Skip the unwanted add-ons

    Evaluate the necessity of extra offerings like extended warranties or upgrades, especially if you have a strict budget. Request an itemized list of all charges and look for unexpected costs.

    “Good cop, bad cop”

    While many salespeople are genuinely helpful, informative and valuable in the car-buying process, that doesn’t mean they won’t use psychological tactics to persuade you to buy. During test drives, I’d tell customers a little bit about the car and then focus on personal lifestyle questions that I could bring up later in the sales pitch. For example, if I found out that they commuted to work, I’d say something like “If you’re here, that means you don’t want to spend hours a day taking the bus to work and back, right? Let’s work together and write a deal today.”

    Sales tactics might involve a coordinated strategy. For example, when negotiating with a customer, my sales manager and I employed a “good cop, bad cop” tactic where he would assume an aggressive attitude, while I had an understanding, sympathetic demeanour. My goal was to build rapport and gain the person’s trust, in contrast to my manager’s near-hostility. This was a technique I was taught by someone with more than 20 years of industry experience—and most of the time, it worked.

    Don’t bend under pressure

    A salesperson might try to rush or pressure you into buying. This may be amplified if car inventory is low, but stand your ground and remain calm. 

    What can you negotiate besides price? 

    As part of your deal, you can ask about perks you want, such as complimentary oil changes for a year, car accessories, winter tires, window tints or all-weather floor mats. But if you want to attempt this, research the costs of these add-ons before you visit the dealership. (Read further tips on planning for a financial negotiation.) 

    Get it in writing

    If a salesperson makes generous offers like free oil changes or extended warranties, get them in writing. Documenting all promises can help avoid misunderstandings.

    It may be hard to trust your instincts during negotiations, as emotions and high-pressure sales tactics can cloud your judgment. However, thorough preparation can help you tell if a deal is too good to be true—or not good at all. Don’t hesitate to seek a second opinion. Above all, stay calm and confident, and be willing to walk away if you’re not comfortable with the terms of the deal. 

    Key questions to ask before signing a car deal

    • What is the final out-the-door price, including all fees and charges?
    • Are there additional warranties or protection plans added to the deal? Can I opt out?
    • Can I see a breakdown of the financing terms and monthly payments?
    • Are there prepayment penalties if I decide to pay off the loan early?
    • Can I review all the documents and contracts before signing?

    Check for hidden fees

    Look for hidden or tacked-on fees not previously discussed during negotiations, such as excessively high administrative charges. Carefully review all documents, question unfamiliar charges, and don’t hesitate to call off the deal if you’re uneasy. 

    The best first car to buy

    Buying your first car in Canada is an exciting milestone. By following these insider tips and navigating the car market with caution, you can make informed decisions and find the best first car to buy for your needs, preferences and budget. 

    If you have a particular car in mind and you’re not in a hurry, it’s worth thinking ahead by up to a year, if not more. And if you’re open to variations in colour, model or trim, this flexibility can work to your advantage. 

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  • What to Expect in Cannabis Real Estate Deals – Cannabis Business Executive – Cannabis and Marijuana industry news

    What to Expect in Cannabis Real Estate Deals – Cannabis Business Executive – Cannabis and Marijuana industry news

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    What to Expect in Cannabis Real Estate Deals – Cannabis Business Executive – Cannabis and Marijuana industry news






























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  • Here’s why you might not have to pay a 6% commission next time you sell a home

    Here’s why you might not have to pay a 6% commission next time you sell a home

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    Going back decades, if you wanted to buy or sell a stock on the open market, you had to pay a 2% commission to buy and a 2% commission to sell. Then the advent of discount brokerage, led by Charles Schwab Corp.
    SCHW,
    +1.64%    ,
    made lower commissions available until eventually, with improved technology and efficiency, the entire industry changed to enable the average investor to avoid commissions completely.

    But the internet hasn’t done much to reduce the cost of selling a home in the U.S. Sellers typically pay a 6% commission to a real-estate agent to list and sell a home, with the seller’s agent splitting that commission with the buyer’s agent. But all of that may change because of a verdict this week in a class-action lawsuit in federal court against the National Association of Realtors.

    Aarthi Swaminathan covers the case, what may happen next and the implications for home sellers and buyers:

    Real-estate advice from the Moneyist


    MarketWatch illustration

    Quentin Fottrell — the Moneyist — works with three readers to answer tricky real-estate questions:

    Economic outlook

    On Wednesday, Federal Reserve Chair Jerome Powell may have bolstered the case that the central bank is finished raising interest rates for this economic cycle. The federal-funds rate was left in its target range of 5.25% to 5.50%.

    Jon Gray, the president of Blackstone Group, spoke with MarketWatch Editor in Chief Mark DeCambre and said he expected the Fed to succeed in bringing down inflation without pushing the U.S. economy into a deep recession.

    Friday employment numbers: Jobs report shows 150,000 new jobs in October as U.S. labor market cools

    Bond-market trend switches again

    The U.S. Treasury yield curve has been inverted for nearly a year.


    FactSet

    Normally, longer-term bonds have higher yields than those with short maturities. But the yield curve has been inverted for nearly a year, with 3-month U.S. Treasury bills
    BX:TMUBMUSD03M
    having higher yields than 10-year Treasury notes
    BX:TMUBMUSD10Y.

    There has been elevated demand for long-term bonds, as investors have anticipated a recession and a reversal in Federal Reserve interest-rate policy. When interest rates decline, bond prices rise and vice versa.

    As you can see on the chart above, the yield curve was narrowing until mid-October. Yields on 10-year Treasury notes were close to 5% on Oct. 19, but they have been falling the past several days as the three-month yield has remained close to 5.5%.

    In this week’s ETF Wrap, Christine Idzelis reports on where all the money is flowing in the bond market.

    In the Bond Report, Vivien Lou Chen summarizes the action as investors react to the Federal Reserve’s decision not to change its federal-funds-rate target range this week and to other economic news.

    For income-seekers looking to avoid income taxes, here’s a deep dive into municipal bonds, with taxable-equivalent yields and a deeper look at those within four high-tax states.

    Ford’s good news — in the bond market

    Ford Motor Co.’s debt rating has been lifted by S&P to investment-grade.


    Getty Images

    Ford Motor Co.’s
    F,
    +4.14%
    credit rating was upgraded to an investment-grade rating by Standard & Poor’s on Monday. This takes about $67 billion in bonds out of the high-yield, or “junk,” market, as Ciara Linnane reports.

    A stock-market warning based on history

    The original Magnificent Seven.


    Courtesy Everett Collection

    By now you have probably heard the term “Magnificent Seven” used to describe stocks of the tremendous tech-oriented companies that have led this year’s rally for the S&P 500
    SPX
    : Apple Inc.
    AAPL,
    -0.52%    ,
    Microsoft Corp.
    MSFT,
    +1.29%    ,
    Amazon.com Inc.
    AMZN,
    +0.38%    ,
    Nvidia Corp.
    NVDA,
    +3.45%    ,
    Alphabet Inc.
    GOOGL,
    +1.26%

    GOOG,
    +1.39%    ,
    Meta Platforms Inc.
    META,
    +1.20%
    and Tesla Inc.
    TSLA,
    +0.66%    .
    With Tesla’s recent decline, that company is now the ninth-largest holding in the portfolio of the SPDR S&P 500 ETF Trust
    SPY,
    which tracks the benchmark index. Here are the top 10 companies held by SPY (11 stocks, including two common-share classes for Alphabet), with total returns through Thursday:

    Company

    		 Ticker

    		 % of SPY portfolio

    		 2023 total return

    		 2022 total return

    		 Total return since end of 2021
    Apple Inc.

    		 AAPL,
    -0.52%         		7.2%

    		 37%

    		 -26%

    		 1%
    Microsoft Corp.

    		 MSFT,
    +1.29%         		7.1%

    		 46%

    		 -28%

    		 5%
    Amazon.com Inc.

    		 AMZN,
    +0.38%         		3.5%

    		 64%

    		 -50%

    		 -17%
    Nvidia Corp.

    		 NVDA,
    +3.45%         		3.0%

    		 198%

    		 -50%

    		 48%
    Alphabet Inc. Class A

    		 GOOGL,
    +1.26%         		2.1%

    		 44%

    		 -39%

    		 -12%
    Meta Platforms Inc. Class A

    		 META,
    +1.20%         		1.9%

    		 158%

    		 -64%

    		 -8%
    Alphabet Inc. Class C

    		 GOOG,
    +1.39%         		1.8%

    		 45%

    		 -39%

    		 -11%
    Berkshire Hathaway Inc. Class B

    		 BRK.B,
    +0.80%         		1.8%

    		 13%

    		 3%

    		 17%
    Tesla Inc.

    		 TSLA,
    +0.66%         		1.7%

    		 77%

    		 -65%

    		 -38%
    UnitedHealth Group Inc.

    		 UNH,
    -0.98%         		1.4%

    		 2%

    		 7%

    		 9%
    Eli Lilly and Company

    		 LLY,
    -2.15%         		1.3%

    		 60%

    		 34%

    		 115%
    Sources: FactSet, State Street (for SPY holdings)

    Five of these stocks (including the two Alphabet share classes) are still down from the end of 2021. SPY itself has returned 14% this year, following an 18% decline in 2022. It is still down 7% from the end of 2021.

    Mark Hulbert makes the case that a decade from now, the Magnificent Seven are unlikely to be among the largest companies in the stock market.

    More from Hulbert: These dividend stocks and ETFs have healthy yields that can lift your portfolio

    A different market opportunity: India is seeing a multidecade growth surge. Here’s how you can invest in it.

    The MarketWatch 50


    MarketWatch

    The MarketWatch 50 series is back, with articles and video interviews starting this week, including:

    PayPal soars after earnings report

    PayPal CEO Alex Chriss.


    MarketWatch/PayPal

    After the market close on Wednesday, PayPal Holdings Inc.
    PYPL,
    +1.89%
    announced quarterly results that came in ahead of analysts’ expectations, and the stock soared 7% on Thursday even though the company lowered its target for improving its operating margin.

    In the Ratings Game column, Emily Bary reports on the positive reaction to PayPal’s new CEO, Alex Chriss.

    A less enthusiastic earnings reaction: EV-products maker BorgWarner’s stock suffers biggest drop in 15 years after downbeat sales outlook

    Consumers drive mixed reactions to earnings results

    Apple Inc. reported mixed quarterly results.


    Mario Tama/Getty Images

    Here’s more of the latest corporate financial results and reactions. First the good news:

    And now the news that may not be so good:

    Harsh verdict for SBF

    FTX founder Sam Bankman-Fried.


    AP

    It might seem that some legal battles never end, but it took only a year from the collapse of FTX for the cryptocurrency exchange’s founder, Sam Bankman-Fried, to be convicted on all seven federal fraud and money-laundering charges brought against him. The charges were connected to the disappearance of $8 billion from FTX customer accounts.

    Here’s more reaction and coverage of the virtual-currency industry:

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