Earnest Money

You don't "have to" but a seller should be cautious when dealing with buyers who make an offer without one. Putting forth a little money shows the buyer is serious. The buyer gets the money back if the offer is rejected or falls through for reasons outlined in the offer. It will go to the seller if the buyer just changes their mind and backs out.

A reasonable amount of earnest money is 1% of the offer. So $1000 for $100,000, etc.

Yes every time and we have bought 5 houses. It just says hey yes we are buying this house. But when you go to the closing they money comes off of what you will be oweing. You don't loose it unless you back out of the deal.

Yes, it's normally 1% of the sale price.

Only if Ernest was the seller.
:)

Yes, anywhere from $100 to $500 - in a check. And usually only after the the contract is verbally accepted.

Absolutely.

Earnest money shows you're making a serious offer. It is credited back to the closing costs, so you don't lose it.

Yes. You provide a check with the offer. Once the seller accepts the offer, they cash the check and hold the money until the sale closes. There are specific instances where you can get your money back, but make sure you read the contract. You can't just "back out" because you found a better house or because you figured out you didn't have the money to buy the house so your financing falls through. You need to be serious before you put in an offer.

And from the seller's perspective I wouldn't accept an offer from someone who hesitates to provide earnest money. I think they have money problems or they aren't serious about the deal.

I take that back. I would probably accept the offer, but make it conditional on being able to keep my house listed and be able to accept counter offers and back out of the non-earnest money deal if a better offer comes along.

It's inappropriate a buyer to expect the seller to take a house off the market if the buyer isn't serious about buying. You can cost me MONTHS in trying to find another buyer.

You don't ever lose your earnest money. Unless you have made an offer that you don't have serious intention of buying. So, get your financing in order and be prepared to buy the house. Then, in some states your earnest money even earns a bit of interest. So you give $5,000 in earnest, but you get $5500 "back" in closing costs. You generally have to put money down anyway...... so what's the issue?

In the buying and selling of my properties (5 times) earnest money - usually 1% of purchase price - is provided with the offer. If the offer is declined, the check is returned. If the offer is accepted, that money goes into escrow. The money goes towards the cost of the house at closing. If you back out of the contract according to stipulations in it (appraisal contingency, financing contingency, etc) then your earnest money is returned. If you don't have contingencies or if you want to back out just from changing your mind, the money goes to the seller.

Nope. You don't "have" to.

Most people do.

Its applied to the price of the home if you buy it.
If not* the sellers keep it

* Most of the time, if you don't buy it die to inspection issues, you get it back. But not always. Ditto, most of the time if you change your mind for a non-structural reason, you don't get it back, but sometimes do.

When you make the offer, no. When the sellers accept your offer, yes, you give them an earnest money check.

Yes, but the strange thing is, in most offers the earnest money is returned even if you are the one to back out. The only time our earnest money will not be returned is on a house we are having built.

Yes. With all 3 properties we have bought we have had to give earnest money. Make sure you read your purchase contract very closely to see under what terms the earnest money will be returned to you if the deal falls through.

Yes, so the buyer has some confidence that you are serious and they are not taking the house off of the market for no reason.

If the seller requires it, then yes. I've NEVER not had to put up earnest money, and never had a buyer who didn't, so it's definitely a pretty standard practice, not a red flag or anything. It's sort of the security deposit on the contract, and it shows the seller that you are serious and aren't going to flake out on them. It goes towards the purchase of the house, so you won't lose it unless you back out.

Always however; the money goes toward the purchase of the house at closing. If the deal fall through because of the home inspection, you get it back.

or, if financing falls through...

We did not. However, we bought from a man who wanted his house gone fast. There was only one other offer on the table. I think for the most part, it's standard to pay earnest money. You get the money back, or it goes to the closing.

we wrote a check, but it was never cashed and was returned to us once the house was purchased, and it was given with the understanding(in writing) that if we decided not to buy the house it would be refunded.