What Is Earnest Money When Buying A House at Buying

What Is Earnest Money When Buying A House. Earnest money, also known as a home deposit, escrow deposit, or good faith money is one of those terms in real estate that can be a bit puzzling, especially if you’ve never heard it before. Earnest money shows a seller that a buyer is in earnest about purchasing their home.

Earnest money is a negotiable dollar amount that the buyer delivers once they have reached mutual acceptance to purchase the home. It is a sum of money you put down on a property to demonstrate your seriousness in buying that property. Earnest money deposits are usually 1 percent to 3 percent of a home’s purchase price, depending on local custom and the pace of current market conditions (the faster the market pace, the higher the deposit).

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The amount of earnest money varies based on the buyer, the seller, and the particular deal. Earnest money deposits are usually 1 percent to 3 percent of a home’s purchase price, depending on local custom and the pace of current market conditions (the faster the market pace, the higher the deposit). In other words, if you’re purchasing a $300,000 home, your earnest money will be between $3,000 and $9,000. Earnest money is also called good faith money.