Table of Contents

• Introduction
• What Earnest Money Is
• Why Earnest Money Matters
• Typical Earnest Money Amounts
• How Earnest Money Is Protected
• Common Misunderstandings
• Strategic Use of Earnest Money
• Final Thoughts
• Work With a Local Expert

1. Introduction

Earnest money is one of the most misunderstood parts of a real estate transaction. Many buyers worry they’ll “lose” it, while others underestimate its importance in competitive markets.

Understanding how earnest money works helps buyers submit stronger offers with confidence.

2. What Earnest Money Is

Earnest money is a good-faith deposit submitted with an offer to show commitment. It is held in escrow and typically credited toward closing costs.

3. Why Earnest Money Matters

Earnest money signals:

• Serious intent
• Financial strength
• Willingness to proceed

In competitive markets, stronger deposits can make offers more attractive.

4. Typical Earnest Money Amounts

Amounts vary based on:

• Purchase price
• Market conditions
• Competition level

Higher-priced or competitive homes often require larger deposits.

5. How Earnest Money Is Protected

Buyers are protected by contract contingencies, including:

• Inspection
• Mortgage approval
• Appraisal

As long as buyers follow contract terms, earnest money is generally refundable.

6. Common Misunderstandings

Many buyers believe earnest money is automatically forfeited. In reality, loss usually occurs only when buyers breach the contract.

7. Strategic Use of Earnest Money

Earnest money should be:

• Competitive
• Proportional
• Strategically structured

It’s a negotiation tool, not a gamble.

8. Final Thoughts

When used correctly, earnest money strengthens offers without exposing buyers to unnecessary risk.

9. Work With a Local Expert

I help buyers structure earnest money deposits that balance competitiveness and protection.