If a note is taken as earnest money, when is it best for the note to be payable?

When a note is taken as earnest money, having it payable on the seller's acceptance is beneficial because it establishes a clear expectation regarding the earnest money's timing. This option signifies that the buyer is committed once the seller accepts the offer, ensuring the seller has immediate assurance of the buyer's intent to proceed with the transaction.

This timing creates leverage and helps enhance the legitimacy of the offer since the seller can see that the buyer is financially prepared and committed right from the acceptance. It underscores the intention to complete the transaction, which can sometimes influence the seller's decision positively, especially in competitive real estate markets where multiple offers might be on the table.

The other choices present varying timelines that may complicate the earnest money's purpose or introduce uncertainty. For instance, having the note payable at closing could unnecessarily delay the confirmation of commitment and may lead to issues if the deal does not move forward to closing for any reason. Similarly, waiting until a specific time after possession or a set period after closing might not reflect the immediacy of commitment that a seller typically seeks. Therefore, aligning the payment of the note with the seller’s acceptance is the most effective approach for earnest money in real estate transactions.