Thursday, July 8, 2021 / by Capprice Kitchen
I’m launching my new series, real estate vocab! Each month, I’ll break down some common and not-so-common real estate terms until you’re basically fluent in realtor jargon!
My name is Capprice Kitchen, Amelia Island Real Estate Agent, and I’m breaking down the ins and outs of earnest money!
Earnest money is a good-faith deposit you make on a home to show the seller you’re serious about buying. The money is deposited after the seller has accepted your offer and is usually kept in an escrow account. When the sale closes, you can choose to keep the cash or apply your earnest money towards your home purchase. Earnest money is not required, but in this market, you need to be prepared to offer earnest money to stand out against other buyers.
How much earnest money do you put down?
A typical earnest money deposit is about 1-2% of the price of the home. That number totally depends on the market in the area. The market is hot right now and you might have to put more earnest money down when you offer!
How does earnest money work?
After accepting your offer, the seller will take the home off the market. The earnest money helps assure the seller that a buyer is acting in good faith, and it provides them with compensation if the buyer decides to back out of the deal.
At the end of the day, earnest money is like a deposit! You’re showing the seller you’re serious and willing to put some money down to back your offer up.
I hope this blog helped answer your vocab questions about earnest money! I’m excited to keep creating these blogs so you can learn more about these fancy real estate terms! Keep returning right here and until next time ...