Why agents care
Buyers sometimes forget that earnest money counts toward cash to close, and sellers judge offer strength partly by it. Explaining both sides keeps expectations clear.
Glossary term
Earnest money
Earnest money is a deposit the buyer pays after an offer is accepted, held in escrow by a title company, attorney or broker. It's credited toward the buyer's cash to close. If the buyer defaults outside the contract's contingencies, the seller may be entitled to it, according to the contract terms.
Example
Example: a buyer deposits $5,000 with the offer. At closing it's credited, so their $53,900 cash to close becomes $48,900 due.
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Questions by topic
Earnest money: common questions
Is earnest money refundable?
It depends on the contract and whether the buyer withdraws under a valid contingency. The contract governs.
How much earnest money is typical?
It varies by market and price. Local custom and the purchase agreement set it.
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