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Earnest Money Escrow:
Earnest money escrow is a special account where a buyer puts a deposit, called earnest money, to show they are serious about purchasing a property. This account is managed by a neutral third party, called an escrow agent, who makes sure the money is safe until the deal is complete. If the sale goes through, the deposit becomes part of the buyer's payment for the property. If the sale falls apart for a valid reason, the buyer gets their money back.
For example, Emily wants to buy a house from Mark. To show her commitment, Emily puts $5,000 in earnest money into an escrow account managed by a trusted escrow agent. After all the paperwork is done and the sale is finalized, the $5,000 is applied to Emily's payment for the house. However, if Emily discovers serious issues with the property during the inspection, and both parties agree to cancel the sale, the earnest money is returned to Emily.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
In the world of real estate, where deals come and go,
There's a thing called earnest money escrow.
A safe place for deposits, a serious sign,
That a buyer is ready to make a house mine.
Emily wishes to buy, and Mark wants to sell,
To an escrow account, their agreement they'll tell.
The money is held by a third party, you see,
To ensure all is fair, and the funds are carefree.
If the deal works out, and the sale is complete,
The earnest money helps Emily's payment to meet.
But if trouble arises, and the deal falls apart,
The earnest money returns, and back to the start.