How much earnest money is enough and what is the difference between earnest money and a good faith deposit? We’re going to find out when we come back!
🤑 How Much Earnest Money is Enough?
Before we get into how much earnest money is enough let me introduce myself. I’m real estate agent John Cunningham with exp Realty and every Thursday like clockwork, I’m right here on YouTube answering questions about real estate. So if you’re on track to buy a home or sell at home anytime soon, do yourself a solid. Hit that subscribe button, hit that notification bell and I’ll notify you each Thursday when I’ve uploaded my next real estate video.
Before we talk about how much earnest money is enough, let’s talk about what it is. Earnest money is a portion of your down payment that just shows the seller that you’re serious about this purchase. And for some weird reason, most of your competition is going to use it and I don’t know how that got popular, but it just is.
I’m going to continue on with my own points on earnest money. This is an important topic to understand. My comrade Bill Gassett has gone deep on this in his excellent article titled What is Earnest Money in Real Estate Sales. You should read it. Twice, if not three times. You’ll learn a ton from Bill. Now, back to my own take on earnest money…
💸 Use Earnest Money to Stand Out (won’t break the bank😉)
Putting down more Earnest Money is a Great Way to Stand Out. And just remember that earnest money gets applied towards the down payment that you have to come up with anyhow, so it doesn’t cost you an extra dime.
Think about it like this. If you’ve got an on a home, let’s say it’s $350,000. Let’s say you’ve got your offer in and your competitor has an offer also. The only difference in the contract is your offer has a 1% earnest deposit deposit, which is the amount I recommend. So, you would have $3,500 earnest deposit while your competition shows 1000. Remember, everything else is equal. So what’s the seller gonna think? No question! They’re going to like your offer a lot better just because you’ve got a little more skin in the game upfront. So that is why I recommend the 1% earnest deposit.
Difference Between Earnest Money and Good Faith Deposit?
Really not much. They’re kind of interchangeable terms, but here in Arizona we use the term earnest deposit or earnest money. When we’re talking about contracts. So that is how earnest money and good faith, money defer, they really don’t. That’s how I would explain earnest money or the good faith deposit.
So now you know my philosophy on earnest money and how much is enough and having a little bit higher earnest money up front, a little bit higher. Good faith deposit upfront could give you the advantage you need to get the house you’ve been dreaming of.
And listen, before you go down below, I’ve got what buyer checklist for you? You can download free of cost and it’ll help guide you through the entire home buying process. You can take that with you and share that with your spouse and your agent and just make sure that everything stays on track so that you don’t forget a thing and you can of see ahead what’s coming next. And Oh, by the way, I’ve got a link to a video below how to make moving easier for kids and a little bit more fun. Click on that, check it out and I’ll see you next Thursday. See ya!