Earnest Money

Earnest money, whose dollar figure is stipulated in the purchase and sale agreement, tells the seller you are a committed buyer. Essentially, the earnest money is the “consideration” needed to complete the legally binding contract. The higher the earnest money offering, the sincerer you appear about purchasing the home.

How Much Shows Good Earnest

  • Each purchase is unique and requires a different approach
  • Typically earnest money falls within 2% and 5% of the purchase price
  • Earnest money can be as low as $2,000 – $3,000 or substantially higher if in a competitive offer situation

When Do I Need to Provide Earnest Money

  • Earnest money needs to be delivered to the escrow company within 2 business days of offer acceptance
  • Earnest money can be in the form of a personal check, Cashier’s Check, Money Order, or wire transfer
  • Either the buyer’s agent or buyer can deliver the earnest money to the escrow company

What Happens to My Earnest Money

  • Earnest money is held in a trust account by the escrow company
  • As the closing date approaches the escrow closer will apply it towards the down payment and/or other closing costs