What's Earnest Money Deposit?

[Ralph DiBugnara]

• Buyers are expected to put down a deposit on their contract. A sign of good faith, this amount consequently allows for additional time to seek financing. Held jointly in an escrow account, the amount ranges from 1,000 to 3% of the purchase price of the property. Earnest money deposit prevents the buyer from walking away from a deal once the home has been taken off the market. If the deal goes through, the money is applied to to closing cost or or down payment.