What’s Earnest Money?

Earnest money shows you’re serious

When an offer to purchase a house is made, you, as the buyer, will also offer an “earnest money” deposit.  This deposit shows the seller that you’re serious about the offer to purchase the property.  If you are not prepared to offer an earnest money deposit with an offer, you should wait to purchase.  You should even wait to go out and shop for properties.  You are not even able to make an offer without it!  This is an indication that maybe buying a home at this time, is not a good idea.  It could be the difference in saving for a month or two to be sure you are prepared to shop for your home and make an offer on the property of your choice!

The amount of earnest money deposit varies based on the type of property being purchased and local market conditions.  As your real estate professional, I’ll help you determine the appropriate amount to pay as an earnest money deposit.

The sales contract will dictate who holds the earnest money deposit  and will be deposited into a trust or escrow account until closing.  The sales contract will also dictate whether or not your funds can be a personal check or certified funds.   At closing, the earnest money is applied to the purchase price.

In the event the sale doesn’t close, the sales agreement generally spells out the conditions under which you would forfeit the earnest money.  Generally if the seller meets all the terms of the contract, the seller will keep the earnest money.  If the seller does not meet the terms of the contract, you, as the buyer, may receive a total or partial refund of the earnest money.