02/16/2025
Earnest money is a deposit that buyers put down when making an offer on a house. It shows the seller that the buyer is serious and committed to purchasing the property.
But why do we even need earnest money? Well, it protects the seller if the buyer backs out of the deal without a valid reason. It also shows the seller that the buyer has enough funds to cover closing costs and is financially capable of following through with the purchase.
So, how much earnest money should you put down? This amount can vary depending on factors such as location, market conditions, and price of the property. Typically, it can range from 1-3% of the purchase price.
Remember, earnest money is not the same as a down payment. It's simply a deposit that will be applied toward your down payment or closing costs at the time of closing.