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What is Earnest Money?

By
Real Estate Agent with The Mode Real Estate Group DRE # 00935148

Have you ever heard of “Earnest Money” before? 💰

👉 It’s essentially a good faith deposit that is provided by a buyer to a seller as a demonstration of their seriousness and commitment to purchasing a property.

I tend to think of it as something like an engagement ring. 💍

→ If you’re getting married, and you want your partner to know that you’re serious, you give them a ring.

When you’re serious about purchasing a house, you give the seller an earnest money deposit.

💲 The amount of earnest money can vary and is typically a percentage of the purchase price, often ranging from 1% to 3% of the total. The specific amount is negotiable between the buyer and seller.

💵 Earnest money or your initial deposit is typically held in an escrow account managed by a neutral third party, such as a real estate brokerage or a title company and serves as a form of protection for both the buyer and seller.

👉 In most cases, the earnest money is applied towards the buyer’s down payment or closing costs at the time of closing the transaction. It is credited as part of the purchase price.

💬 If you’re thinking about buying a home and want to know more details, comment “GUIDE” and I’ll send you my 2024 FREE Home Buyers Guide 👇

Posted by

Lori Mode

Lori Mode, Keller Williams Realty - Elk Grove

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Lori Mode and Bruce Durham, Elk Grove agents

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About the author: The above Real Estate information was provided by Lori Mode.  Lori can be reached via email at Lori@ModeREGroup.com or by phone at 916-405-5737. Lori has helped people move in and out of Elk Grove and surrounding Sacramento areas for the last 37 years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Lori Mode this is a very good, but simple explanation of Earnest Money.

Apr 22, 2024 12:57 PM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello Lori - understanding the local real estate market makes selection representation extra important in my opinion.    Choose wisely.  Those differences can matter and make a difference.  

Apr 22, 2024 01:17 PM