What is Earnest Money and How Much is Enough???
Hey guys, I hope everyone is having a great day!
I want to take a few minutes and do a video on earnest money, I want to talk about what Earnest Money is, and how much Earnest Money is enough in today’s market.
So let’s get started, what is Earnest Money? Earnest Money is an amount that is agreed upon both the buyer and the seller in a real estate contract, it is also known as a Good Faith Deposit Showing the seller that the buyer is serious and has full intention of purchasing their property. Now once the contract is signed (by sellers and buyers) and executed (by Realtor®), the buyer will be given three business days to turn in their earnest money to the title company, in return the seller agrees to take their home off the market and make it available only for the buyer’s inspection and appraisal.
So, let’s talk about how much Earnest Money is enough. Choosing the right amount can show a seller you are a serious buyer, the larger the deposit the more attractive your offer will look.
Now let me give you a recommendation on “what I think” a good Earnest Money amount is. 1% of the sales price is usually a very strong amount, to give you an idea, if we purchase a house for $100,000 you will want to put maybe about $1,000 Earnest Money; If you purchase a house for $200,000 the amount would be $2000 of Earnest Money, now we want to get to as close as possible to that 1%
At the end of the day it’s negotiable so in the event that you’re having a hard time coming up with that number, let your Realtor® know so they can help you make an informed decision about how much Earnest Money to include in your offer.
My name is Jeff Llamas, I am with Clear View Realty if I could ever help you with the with the purchase of a home or selling your home give me a call. My number is 915-422-4946 thank you and have a blessed day.
Note: The recommendations on this video are based on the current market for El Paso, TX. The real estate market on other cities likely will be different and we recommend you to hire a local Realtor® for your area.