Earnest Money

Earnest money is a good-faith deposit a buyer makes when submitting an offer on a home. It shows the seller you're serious about the purchase.

How Much:

• Typically 1-3% of purchase price
• Can be more in competitive markets
• Negotiable between buyer and seller

  What Happens to Earnest Money:

1. Deposited in escrow when offer is accepted 2. Held by escrow/title company or real estate broker 3. Applied to down payment or closing costs at closing 4. Returned to buyer if deal falls through (under certain conditions)

When You Get It Back: Earnest money is typically refundable if:

• Contingencies aren't met (inspection, financing, appraisal)
• Seller backs out
• Contract allows withdrawal within specified period

  When You Lose It:

You may forfeit earnest money if:

• You back out without a valid contingency
• You miss contract deadlines
• You fail to secure financing (if no financing contingency)

  Protecting Your Earnest Money:

• Include appropriate contingencies in your offer
• Meet all contract deadlines
• Respond promptly to requests
• Understand contract terms before signing
• Keep records of all communications

  Earnest Money vs. Down Payment:

Earnest money is a deposit showing intent; down payment is the larger amount due at closing. Earnest money typically becomes part of your down payment.