Glossary
Earnest money
Earnest money is the good faith deposit a buyer puts down when the seller accepts the offer. It is held in escrow and credited toward the price or closing costs at closing.
A bigger deposit makes an offer stronger because the seller knows you are committed. The amount is negotiable and varies by market and price.
When you get it back, and when you do not
- Back to you if you cancel within a contingency in the contract, such as inspection or financing.
- At risk if you walk away after your contingencies end without a reason the contract allows.
- Credited at closing if the deal closes.
- Offer
- $173,000
- Earnest money
- $1,500
- Inspection period
- 7 days
Investors buying as-is often keep a short inspection period so the deposit is only at risk once they have checked the house. Your offer packet in Run The Deal lists the deposit with your other terms.
Count it in your cash to close with the flip calculator.
Questions
How much earnest money is normal?
It varies by market and price. Ask a local agent what makes an offer competitive where you are buying.
Who holds earnest money?
Usually the title company, closing attorney or a brokerage escrow account named in the contract.
Written by Austin Frangoules | Updated
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