Earnest money is a good faith deposit a buyer puts down on a property they just offered on. It tells the seller you are serious about buying the home within the boundaries of a contract.
Why Do Sellers Require Earnest Money?
Sellers need this deposit before they agree to take their home off the market. When you put funds down, you show them you are a committed buyer. As a result, the seller gives you the time you need to safely complete your home inspection process. This protects both sides while you move forward.
Can You Actually Lose Your Earnest Money?
Yes, you can lose your deposit, but an experienced agent will protect you from this. In fact, nobody wants to lose their earnest money. We actively try to avoid that scenario at all costs. Because there are plenty of built-in protections for a buyer, losing your funds is very rare. Personally, we make sure our clients stay covered.
Where Does the Money Go at Closing?
Your earnest money is simply a deposit, so it is not an extra fee. When you finally close on the house, that money goes toward your down payment. Alternatively, you can apply it toward your closing costs. Plus, if you use a zero-down loan and have all costs covered, the funds go right back to you.
How Much Earnest Money Is Required?
There is nothing set in stone regarding exactly how much earnest money you need. Because of this, you should never let a lack of huge savings prevent you from buying a home. You can always sit down and learn about [LINK: the home buying process] to put together a solid game plan.
Have more questions about earnest money or scheduling a home inspection? Visit spokanehomeguy.com or call 509-990-SOLD (7653) — we’re happy to walk you through it.
FAQ
No, the seller does not just pocket your money as a fee. Earnest money acts as a good faith deposit to show you are serious about purchasing the home. It sits safely during your inspection process, and you eventually apply it to your closing costs or down payment.
Yes, you absolutely can. If you use a zero-down loan program and your closing costs are already fully covered, you do not lose your deposit. At the very end of the transaction, that original earnest money simply goes right back to you.
No, there is nothing set in stone regarding how much earnest money you actually need. You should never let the fear of a massive upfront deposit stop you from buying a home. Our agents can help you create a game plan that fits your specific budget.
