Getting ready for first deal-How much earnest money should I put down?

Question

I'm wondering if there is a typical amount to put down as earnest money? Thanks.

Jonathan Greene · Answer

It depends what market you are in and how competitive it is, as well as what type of property you are buying? If you want to be competitive and the market is hot, your total earnest money (all in before closing) should be at least half of your downpayment. So, if you are putting 20 pct down, you should have 10 pct in the bag before closing and 10 pct at close. That's a strong earnest.

I see way too many buyers and investors trying to put like 1k or 5k down prior to close, but that is no skin in the game and will not get real sellers to move.

Kevin Coco-Senyszyn · Answer

Ginnie, I typically like to see 1% for earnest money. I.e., for a $250k house, $2,500 of earnest money, with a reasonable option amount. If you're really serious about a deal, putting down more earnest money may make the difference between you and another offer. At the same time, if something goes sideways with your deal, you may end up losing that money.

Bryce Jamison · Answer

For me, it depends how much I want the seller to accept my offer and how willing I would be to walk away from that amount of money.

If I'm playing hard ball on a property I'm not crazy about I might offer $1,000. If it's a property I love and there's nothing I could find in the inspection that would make me walk away I'll come in higher at 5K, 10K, or more.

Aaron Hoisington · Answer

Hi Ginnie. My name is Aaron. I see this is an older post (better late than never) Usually 1% of the purchase price is reasonable. If you need help through the process let me know. I even help with doing transactional lending. Let’s chat for future deals.

Getting ready for first deal-How much earnest money should I put down?

Getting ready for first deal-How much earnest money should I put down?

Most Popular Reply

4 Replies