Ask Nanci
What is earnest money and how is it applied?
Short Answer
Earnest money is a deposit you make with your offer to show the seller you are serious. It is held in escrow by a third party, not handed directly to the seller. At closing it is applied toward your purchase, and if the deal falls through for a reason the contract protects, it is generally returned.
General information, not legal or financial advice.
What earnest money is
Earnest money is a good-faith deposit that tells the seller you are committed to buying the home.
The amount varies, but it is typically a meaningful figure that shows you are serious about the purchase.
Where the money is held
The deposit is held in escrow by a third party, such as a title company, so neither you nor the seller handles it directly.
It stays protected until the transaction moves forward or resolves.
How it is applied
At closing, the earnest money is applied toward your purchase, typically reducing the amount you bring to the table.
If the deal closes, the deposit works for you.
What happens if the deal falls through
If the sale falls through for a reason the contract protects, such as a failed inspection or financing contingency, the earnest money is generally returned to you.
If the buyer backs out without a protected reason, the deposit can be at risk, so the contract terms matter.
How Nanci can help
I explain the earnest money amount and the contract terms before you sign, so you understand how your money stays protected.
It is one of the clearest ways to see that your interests are looked after throughout the process.
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