So, you’ve finally found the home of your dreams. It’s perfect in terms of location – and it really doesn’t need much fix-up work in order to make it move-in ready. You’ve already been pre-approved for a mortgage. And, there’s been a lot of traffic during the home’s recent open house – so, if you don’t move quickly to make an offer, chances are, you could lose out on this ideal property.
You’re ready to make an offer – and the home is perfectly priced within your budget range. The question is, just how much earnest money will you need to put down along with the offer that you submit?
The answer – typically, you should submit somewhere between 1 and 3% of the purchase price of the home as earnest money. This means that if you will be offering $200,000, then you should submit an earnest money check in the amount of between $2,000 and $6,000. And, the more serious you are about buying the property, the higher your check should likely be.
For example, if there is a lot of action on a particular home and it is likely that there are lots of offers, then you should ideally make your earnest money closer to the higher end of the 1 to 3% range.
This will show the seller that your offer is serious. This, coupled with being pre-approved, can go a long way towards having your offer accepted – especially if there are no contingencies, such as having to wait until your current home to sell.
If the seller does not accept your offer, you will get your earnest money back. If, however, your offer is accepted, the funds will be held in an escrow account until the sale of the home is in its final stages. Then, once everything is ready, the funds will be released from escrow and they will be applied as a part of your overall down payment.
If you are in the market to purchase or sell a home, give us a call. We can assist you with the transaction, as well as with answering any questions that you may have along the way.