Earnest Money

I’m often asked what does earnest money do in a transaction. Earnest money is nothing more than a check you write when you get a deal accepted to show the seller you are serious about their home.

The amount varies widely, but in the Dayton area, 1% of the purchase price is typically the most we see buyers doing. The more you put in, the more serious you can look to the seller. When you go to your closing, this money is credited back to you. Problems can arise with release of the earnest money if the deal does not close.

The contract you sign states specifically under what conditions the money can be released. I’ve found that a lot of agents don’t go into detail about this when writing an offer, but it is very important to understand it because you don’t automatically get it back if the deal fails to close. According to the contract the earnest will only be released from the broker’s trust account under 4 conditions. I’m always available to discuss how this all works, so feel free to reach out anytime to start the conversation.

As a buyer the last thing you want to have happen is to spend money on an appraisal and inspections, then have a deal fail and be told your earnest money is tied up!

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