The meaning of earnest money is in the name, it is a deposit of good faith on a home loan from buyer to seller.  Earnest money deposits will often set your offer apart from other applicants.

Earnest money is different from a down payment and often a lot less. It’s basically a good-faith gesture and says to the seller that you are serious about purchasing the home.

There are a number of factors that go into ensuring your earnest money satisfies the seller and that you get it back if things don’t work out. In this article, you’ll learn what earnest money is, how much you should put up and how to ensure you get it back if the deal doesn’t work out.I

As the buyer breaking out your checkbook and presenting an earnest money check with the offer shows that you are a serious buyer.  It speaks to the fact that you have the desire to seal the deal and may even help your offer get accepted over other offers.

Think of it as a showing of good will and an ample deposit can put you in a good negotiating position on contract terms.

The seller knows that if the buyer jumps ship on the deal without valid reasons, they stand to lose their earnest money deposit. Valid reasons are not qualifying are:

  • The buyer doesn’t qualify for a loan.
  • The house doesn’t pass inspection.
  • The house doesn’t appraise.
  • There are title search issues.
  • Consult a real estate attorney for more specific details.

Any other decision to pull out of the deal can result to a forfeiture of the earnest money to the seller.


The earnest money amount will vary according to your area, seller and price of home you’re considering. The best way to determine local customs is to talk to an experienced real estate agent. Your earnest money deposit could range anywhere from a couple hundred dollars to a few thousand. So much depends on the specific property, the competitiveness of the market and other market-specific factors. Your earnest money deposit also reduces the amount of cash to close that will be needed at closing.

A highly competitive market might mean you’ll need to put down more money. Most agents agree that buyers should include an earnest money amount that will be taken seriously, but not so much that a buyer’s finances are at risk. It’s unlikely that you’ll lose your earnest money deposit, but it’s important to protect yourself.

At the end of the day and recapping what I wrote here, the decision is ultimately up to you, how much you can afford to put down and how much you really want that house. 

Questions?  Give me a call at 813-361-6350.

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