Advanced English Dialogue for Business – Good faith deposit

Listen to a Business English Dialogue About Good faith deposit

Nora: Hi Zoey, do you know what a good faith deposit is in business and finance?

Zoey: No, I’m not familiar with that term. What is it?

Nora: A good faith deposit, also known as earnest money, is a sum of money paid by a buyer to a seller to demonstrate their serious intent to purchase a property or enter into a contract.

Zoey: Oh, so it’s like a way for the buyer to show their commitment to the transaction?

Nora: Exactly. The deposit is typically held in escrow until the transaction is completed, at which point it may be applied towards the purchase price or returned to the buyer.

Zoey: Are there any benefits for the seller in receiving a good faith deposit?

Nora: Yes, receiving a good faith deposit can provide assurance to the seller that the buyer is serious about the transaction and may deter them from backing out without cause.

Zoey: Can the amount of the good faith deposit vary?

Nora: Yes, the amount of the deposit is negotiable and may vary depending on factors such as the value of the property and local market practices.

Zoey: What happens if the buyer backs out of the transaction after paying the good faith deposit?

Nora: In some cases, the seller may be entitled to keep the deposit as compensation for the time and effort invested in the transaction, but this depends on the terms of the contract.

Zoey: Are there any risks for the buyer in paying a good faith deposit?

Nora: There’s a risk of losing the deposit if the buyer breaches the contract or fails to complete the transaction for reasons not covered by the contract’s contingencies.

Zoey: Thanks for explaining, Nora. Good faith deposits seem like an important part of real estate transactions.

Nora: No problem, Zoey. They help provide security and confidence to both buyers and sellers in the negotiation process.