when someone makes an offer? You aren't going to like the answer...technically, an offer doesn't HAVE to be accompanied with an earnest money amount but the real answer is whatever the two parties will agree to. (side note...in almost 10 years of real estate, I've never heard of an offer without any earnest money being accepted).Since that answer isn't very helpful perhaps understanding the purpose of what earnest money is and maybe knowing what some of the trends, patterns or habits of determining earnest money will be useful knowledge.
Earnest money is often nicknamed "good faith money". The inclusion of an earnest money deposit in an Offer to Purchase & Contract gives some indication to the seller of how serious (in earnest) a buyer is. The job of the Buyer's Agent is to counsel the buyer to offer enough earnest money to make the seller interested but not so much that a lot of money is tied up and out of reach of the buyer. The job of the Seller's Agent is to help the seller determine if the deposit offered is sufficient that any buyer would be very reluctant to walk away from it in the event of a contract going badly.
Too little earnest money can easily send a message to the seller that the buyer doesn't have enough cash on hand to seriously enter into the house buying arena. Double trouble for the seller is receiving an offer that is not only much lower than they hoped for but also accompanied by either no earnest money OR just a couple hundred dollars. On the buyer's side? That is a lousy strategy and almost 100% guaranteed to assure the seller will never take it seriously. No seller likes a low offer but usually if a significant earnest money deposit is made, it softens the blow and usually keeps the lines of communication open.
Earnest money, once the offer is accepted, sits in a no man's land also known as a trust account. The listing or selling agency can deposit it as well as the closing attorney (in the case of NC). Neither party can touch this deposit while the contract is active. Even if the contract is cancelled, the earnest money is not automatically returned to the buyer although in most cases the parties do agree to do so. If the contract is cancelled during the Buyer's Due Diligence period then the parties agree by the signing of the contract that as long as the Buyer has notified the Seller (in writing before the expiration of the period) of their intentions to cancel the contract, the earnest money is returned. If the Buyer waits until after the Due Diligence expiration to cancel a contract then the parties have to agree to the dispersement of the earnest money. If the parties do not come to an agreement, in most states there is a process in place that after a specified period of time whoever held the earnest money in their trust account can turn the money over to the local magistrate or Clerk of Court and the parties can continue the argument in court.
There is no rule of thumb when it comes to determining an amount of earnest money to offer. There are so many factors and the buyers themselves have to determine how seriously they want the seller to regard their offer. It is common in some areas of the country to offer 1 to 2% of the purchase price as earnest money, some areas depending on how hot the market is might be even higher - especially in multiple offer situations. In our area with our buyers, we usually suggest that they decide for themselves how much money would be uncomfortable for them to walk away from if they cancel the contract AFTER the Due Diligence period expires. Not an amount that would ruin them but how much money does it take for them to really think hard about losing if they breach a contract and that's usually the amount they will offer.
If a buyer really wants a house, that's what needs to be conveyed. They want the seller to know they are "in earnest" about the purchase and the earnest money deposit should reflect that...even if the purchase price does not!
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