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Welcome to Ask an Agent. If you have any real estate questions you want answered, email us at [email protected] and we’ll feature your answer on an upcoming blog post.
Question: What is earnest money? How much should I set aside?
Answer: Earnest money is a deposit on a house you want to buy. It’s used to show sellers that you are “earnest” or very serious about buying their home. It should be substantial enough to demonstrate good faith. Without earnest money, anyone could make offers on many homes, essentially taking them off the market until a homebuyer decided which one they liked best. Sellers rarely will accept offers without earnest money, so you can expect to put down between 1-5% of the purchase price depending on local conditions.
If all goes well and you buy the house, earnest money goes toward the down payment and closing costs. In many circumstances, you could get most or all of your deposit back should you find something about the house that voids your offer. In order to further clarify earnest money and how it is handled, be sure your purchase agreement dictates the details of any scenario. Your Shorewest real estate agent can help you navigate the home buying process, including everything involving earnest money.
Tags: ask an agent, buying a home, deposit, earnest money, home buyer tips, Home Buying, home seller tips, Home Selling, selling a home, shorewest, Shorewest Realtors, tips and advice
Categories: Home Buying, Home Selling
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