We take soooo much for granted....the terms we use every day....this "question" contest....thank you Banana Lady...made us search our memory for this question....when we were Newbies and had no outline of the steps that are required in the purchase of a house.
Ernest is not really the character pictured at the left...he is not really a character at all...Ernest is Earnest.....Investopedia defines Earnest Money as: A deposit made to a seller showing the buyer's good faith in a transaction. You as a buyer, are showing the Sellers YOUR character...what you are willing to financially show them to secure an offer on their home and "reserve" it for you until all the financing is complete and closing can take place.
Some Realtors define it as "having skin the game"...showing the Seller who does not know the buyer at all ....that they have a sincere interest in purchasing their property. We call it..."Putting your money where their house is" deposit.
The money is held in a trust account ...think of it as an invisible safe....and kept there until closing at which time it applies to the purchase of the house...a sort of mini down payment which combines with the other money which is used for the down payment.
Ernest is your friend..... "He"....is part of the persuasive power to show your sincerity to the Seller who is considering awarding you the sale of their home.
The amount of earnest money may vary with the price of the home, what may be considered "traditional" for your market...ask your Realtor's advice when you determine the amount to write on the contract.
If youare ready to "Meet Ernest"....and write an earnest money check for the purchase of a home in southeastern Wisconsin...Call the Hansons...we are happy to help you...If you live elsewhere...give us a call and we will be happy to refer you to a successful associate anywhere in the world to give you the professional real estate service you deserve.