How Much Should I put down for Earnest Money Deposit?
This is a very common question. Clients ask me all the time, how much should it be? who will hold the check if the offer is accepted?
Every offer that gets written will have an "earnest" check attached to it. The check referred to as your "earnest money deposit" or "Good faith deposit". Your agent will send your offer to seller's agent (or to the owner if it is a "for sale by owner") with a copy of your earnest money check. It is returned if the offer is rejected.
The "earnest money deposit" or "good faith deposit" is the money you provide to the seller to hold in escrow during the process of buying their home. It shows that you are serious on buying their house.
The amount of the earnest money really depends. If you are looking on a house that has been on the market for a long time versus a "hot buy" that is receiving multiple offers...Customarily starts at $500, the most common amount that I see over there is $1,000 or normally 1% of sales price or close to it. It is really up to you!
The earnest money check is hold in an escrow account, from the real estate office that is handling the sale. If your offer is accepted the amount of your "earnest check" will be applied towards your closing costs. It will show on your HUD-1. So this money will reduce what you need to "bring to the table". Of course that will depend if sellers are paying a portion of the closing costs. Each situation is different. Talk to your agent if you have questions. If you don't have an agent to represent you, I will be more than happy to help you in Maryland or to recommend somebody out of my state.
How Much Should I put down for Earnest Money Deposit?
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