Earnest money shows you’re serious

Typically when an offer to purchase a property is made, you, as the buyer, will also pay an “earnest money” deposit. This deposit shows the seller that you’re serious about the offer to purchase the property.

The amount of earnest money deposit varies based on the type of property being purchased and local market conditions. As your real estate professional, I’ll help you determine the appropriate amount to pay as an earnest money deposit. In the Metro Phoenix market, you can expect to pay approximately 1% of the purchase price in earnest money at the time we open escrow. These funds apply towards your purchase price at close of escrow.

The sales contract will dictate who holds the earnest money.  Usually the seller’s real estate agent will deposit the earnest money in a trust or escrow account until closing.   We will always use a title company to hold the earnest funds.

In the event the sale doesn’t close, the sales agreement generally spells out the conditions under which you would forfeit the earnest money.  Generally if the seller meets all the terms of the contract, the seller will keep the earnest money.  If the seller does not meet the terms of the contract, you, as the buyer, may receive a total or partial refund of the earnest money. Remember, your earnest money is 100% fully refundable for the first 10 calendar days after your contract is accepted and signed by all parties (your inspection period). After that, everything is negotiable and it becomes a bit more difficult to protect earnest funds.