Category Archives: home offer

Home Buying: Earnest Money FAQ’s

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Photo of small chalk board with message about home sweet homeBuying a home seems so simple on all those TV shows: they just search for a home and then buy it, right?  In reality, the process of searching for and buying your home is filled with terms and twists along the way.  Sometimes you find the perfect property—and it’s the one every other buyer wants.  One way to get an edge on your competition is to include earnest money in your offer.

What is earnest money?

Earnest money is a deposit included with your offer that shows you’re serious about purchasing the home. The amount of earnest money you include in the offer is applied to the purchase price at the time of the home sale. For example, if you include an earnest money amount of $2,000 in your offer of $150,000, you will pay $148,000 at closing.

How much earnest money is the right amount?

There is no right amount of earnest money.  Ask your real estate agent for their opinion on how much earnest money is right for your home sale.  On average, the amount of earnest money varies from state to state, and even among communities and counties in Wisconsin.

What if I need to withdraw my offer?  What if the home sale doesn’t go through?

If the purchase falls through because of any of the contingencies included in your offer, such as an issue found in the home inspection report, you, the buyer, receive the earnest money in full. If you decide to withdraw from the sale for a reason not included as an offer contingency, the buyer and seller can negotiate an agreement to compensate the seller while still giving the buyer a partial refund. If you have any concerns about earnest money, ask your agent when you put together your offer.

What’s the importance of earnest money?

Earnest money demonstrates that your offer is genuine and committed. When you include earnest money in your offer, you show the seller you are making a down payment and are serious about the transaction.

If you have any more questions about earnest money, ask your agent about earnest money and the particulars of your transaction.  We know that we’ve helped our clients work through the specifics of earnest money in Wisconsin, and experience counts.