Monday, August 16, 2021 / by Karri Bedor
WHAT EXACTLY IS EARNEST MONEY?
Most buyers don’t recognize the entire buying process and can get overwhelmed after they make an offer. As your realtor, it is important that my clients feel comfortable and confident during the entire transaction. I make sure my buyers understand the timeline involved. Once an offer is accepted, the next step is to send in the earnest money in the amount that was written in the offer. This most commonly goes to the listing agent’s brokerage. (trust fund)
How much earnest money should I put down?
In a highly competitive market, it can make the offer a bit stronger if you put more down so the seller knows you are very serious. Typically, 1% - 3% is suggested (3% is on the higher side, in my opinion). I see 1% - 1.5% most often.
If all goes smoothly, the earnest money is applied to the buyer's down payment or closing costs.
Can you lose your earnest money?
Unfortunately, there are situations where the buyer has to forfeit the earnest money. If the buyer wants to back out or fails to meet deadlines, earnest money may be given to the sellers. This can be negotiated, in some cases, as all situations are different.