Ask the REALTOR® is a new series in which I’ll answer your most commonly-asked real estate questions, with a new Q&A posting every week or so. If YOU have a real estate question for me, drop me a note here.
This week’s question: What is earnest money? Here’s the answer in this brief video, and don’t miss the transcript below.
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Hi, I’m Cari McGee and this is Ask the Realtor. Over my just about 15 years in the business, I’ve received a lot of questions from buyers and sellers and the general public regarding all things real estate-related, and today I’m going to answer another one of them.
One of the questions I get from buyers is, “What the heck is earnest money?”
Earnest money is an indication to the seller that you’re literally earnest about this purchase. You’re not running around town willy-nilly making offers on houses. You are saying, “I care enough about this house and making it mine, that I’m willing to put my money where my mouth is.”
Earnest money, generally, in our area, is about 1% of the purchase price. So, say on a $200,000 home, you’d expect to put about $2,000 down in earnest money. That is not a hard and fast rule, and you can go ahead and put down whatever you put down, but then the seller has the option to ask for more so that they’ll feel more comfortable about the offer that you’re putting down. If you have more skin in the game, sometimes a seller will look at your offer more favorably.
So, that’s what earnest money is. If you have more questions about that or anything else, feel free to contact me in one of the following three ways: You can go to my website, carimcgee.com, and click the “Contact” button. Or email me, email@example.com. Or text me, 509-430-5342. Thanks so much. Bye!