If you’re like most people buying a home for sale in Alys Beach, a condo in Destin, or a home on a large parcel of land in Santa Rosa Beach, you’ll most likely have to give the seller an earnest money deposit when you’re ready to make an offer.
But what is earnest money, how much will it cost you, and why do you need it?
What is Earnest Money?
An earnest money deposit is a deposit of cash made to the seller to show your good-faith intention to buy his or her home. (It’s sometimes called a good-faith deposit.)
You don’t give it directly to the seller, though. Typically, you’ll get a cashier’s check or a money order from your lender (although sometimes personal checks are acceptable) and give it to your Realtor®. Your Realtor will then put the money in an escrow account, where it will sit until you close on your home.
How Much is an Earnest Money Deposit?
There’s no set standard or requirement for earnest money deposits. Typically, though, you’ll put between 2 and 3 percent of the home’s purchase price down as an earnest money deposit.
Why You Need to Put Down Earnest Money
Because it’s a good-faith deposit, you use your earnest money to show the seller you’re really serious about buying his or her home. If you deliver an earnest money deposit with your offer, you’re telling the seller that you’re willing to put your money where your mouth is.
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