Earnest money shows you’re serious

Typically when an offer to purchase a house is made, you, as the buyer, will also pay an “earnest money” deposit. This deposit shows the seller that you’re serious about the offer to purchase the property. 

The amount of the 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. 1-2% is usually enough in a normal market.  It can be higher in a sellers market, conversely lower in a buyers market.  

The sales contract will dictate who holds the earnest money. Usually the buyers real estate agent will give it to the title company who will deposit the earnest money in a escrow account until closing.  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 is in breach of the contract, the buyer will keep the earnest money. If the buyer is in breach of the contract, the seller may keep the earnest money.