Word It Wednesday: Earnest Money

Written by on November 30, 2017


Earnest money is a deposit you pay to show the buyer you’re serious about the transaction. Earnest money is what shows your good-faith intent in a real estate transaction.


Like any buyer, they would think twice about withdrawing from the deal if they have made any deposit as in act of “good faith.” When a buyer decides to accept an offer for a home from a seller, both parties are entering into a contract. To prove that the buyer has good intentions, he is required to provide earnest money as a deposit. When the transaction is finalized, the earnest money is put towards the down payment.

The amount of earnest money varies, depending on what kind of home you’re purchasing. You can always negotiate with the seller if you don’t want to pay everything at once. It is possible if you want to pay half after a successful completion of any due diligence period.

Be sure to fully understand the contingencies in your contract before you withdraw or continue your deal.

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