How Much Earnest Money Is Right Amount?

How Much Earnest Money Is Right Amount?

How much earnest money is the right amount? There isn’t any legal answer. In general, the answer is whatever a seller is willing to accept. In some markets, the norm is to put down 1 percent of the total purchase price. For instance, for a $300,000 house, a buyer might be expected to put down $3,000.

But if a buyer is bidding on a hot property in a great neighborhood, it could make sense to boost the sum to increase the odds of sellers accepting the offer.

Meanwhile, in other areas of the country, binder amounts are shrinking, says Lori Byrum, an associate with RE/MAX Executive Realty in Charlotte, N.C. "Almost all (buyers) are doing 100 percent financing so who really worries about the binder? We're way more worried about the appraisal," Byrum says about her market.

— Allen Norwood (04/07/07)

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