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What percentage of purchase price is typically required as earnest money ?

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November 12 2011 - Palatine
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In our area of Houston Texas, it varies from $500 up to 3% of the purchase price. It depends on what the seller wants to accept for earnest money. We do see quite frequently in this area that $1000 usually is acceptable for many sellers.
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January 02 2012
In Louisville, Ky typical earnest money is 1% of sales price. (min of $500)
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January 02 2012
In my area it is about 1% of the offer price.  For a cash offer on a bank owned property, they may ask for 10%.
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December 19 2011
The more you offer as a deposit, the greater your purchasing power.
Ania
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December 19 2011
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There are different practices in different areas. The standard is is 3% here in California, but in NYC the standard is 10%.
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December 18 2011
There is no set amount. You want the Seller to feel comfortable. So demonstrate that you are serious. Ask you Agent what it will take
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December 18 2011

To the best of my knowledge there is no set amount, I think the norm in our area is 1% of your offer. The more you offer the more favorable the seller may be toward your offer.

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December 16 2011
In our market area in New Jersey, many buyers are opting for FHA loans, which requires a minimum of 3.5% (total) as a deposit.
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December 15 2011
For me the answer depends on the market.  If you love the house and you are in a hot market, like Austin, Texas with a home with multiple offers then I would say 5%.  It shows the Seller that you are serious about the home.  In general on situations that are not multiple offers I would generally advise 1-2% of the offer price.

Hope this helps!  If you would like to read more on the home buying process you can [hotlink removed by Zillow moderator]

SM
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December 13 2011
It depends. It will be any amount from usually $ 500.00 and up. The most typical amount is under 1k. If the price points are higher, the deposit most certainly go up. It would probably depend on the region but I believe in most cases it's less than $1,000.00. There aren't percentages though. Your Realtor would know what's best. Seek your local Realtors expertise. 
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November 15 2011
What I have seen as "typical" around these parts is $1000 unless otherwise requested in the listing. Of course the more you are willing to put up the more committed you are viewed to be particularly when submitting on REO's. I have found that more is best.
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November 15 2011
In my experience it is normally 1 percent of the offer price. However there is no hard set rule. Anyone can ask for any amount...best of luck
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November 14 2011
There is no legally required amount. That can be negotiated and is mainly used to increase the strength of your offer. If a seller has two offers on a $300,00 house and one offers $500 earnest money and the other offers $5,000, then all things being equal the seller is more likely to accept the higher earnest money offer.
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November 13 2011
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Legally $1 is enough. What you choose to put down and why can vary as talked about below.
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November 13 2011
grandparick - Great question.  There are no set standards for the amount required for an earnest money deposit.  The reality is, it depends; your earnest money deposit is part of the overall negotiation.

Let's take an example - You're looking to sell your $300,000 home and you receive the following three offers:

1. $295,000 Purchase Price; $500 with Offer to Purchase; $8,350 Earnest Money at Purchase and Sale (for a total of 3% in); $1475 additional from the buyer at closing (for 3.5%), the remainder FHA financing ($284,675), seller to put $5000 towards closing costs for buyer.  Terms: Close in 90 days with the following contingencies: finance with a loan commitment date in 60 days, inspection with a buyer option for any amount of repair over $3000, lead inspection, septic system inspection.

2. $305,000 Purchase Price; $1000 with Offer to Purchase; $29,500 Earnest Money at P&S (for a total of 10% in); $15,250 additional from buyer at closing (total 15% from buyer).  Terms: Contingent on the sale of the buyer's home, which has been on the market for 157 days; full slate of inspections with buyer option for any amount of repair over $1000.

3. $280,000 Purchase Price; $1000 with Offer to Purchase; $13,000 Earnest Money at P&S (for a total of 5% in); $42,000 additional from buyer at closing (total 20% from buyer).  Terms: Close in 45 days; full slate of inspections with buyer option for any amount of repair over $0.

The question is: which is the better offer?  The way you need to look at offers is to evaluate the likelihood the offer has to close.  Is it better to take a lower offer (just assume that this is a best and final scenario and there's no further negotiation) with a higher likelihood of closing or do you take the highest offer? 

So, the answer to your question is - it depends.  How serious are you about wanting the home, how strong is  your offer, do you present the best terms?  The Earnest Money deposit is just one small piece of the puzzle that needs to be evaluated. 

You can try to sway someone with a large earnest money deposit if the rest of your terms aren't as strong.  I like to limit my client's liability by holding money back until closing...as much as makes the offer a good offer and dependent upon my client's motivation.

Good luck,
/rc
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November 13 2011
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In looking in FL, I usually put down $1k. That is enough to show the offer is legit.

If for some reason I want the seller to move quickly, I will up the ante. In once case, I found a house that I liked that I thought was priced just under. Thinking the house might go fast, I put in $5k as earnest money.

Turns out the next day it was a multiple offer situation, bidding war ensued and I withdrew.
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November 13 2011

Depending on the state you live in the amount may vary.
In California, the maximum amount a buyer can lose as earnest money is 3% of the overall purchase price. This is true even if the buyers deposit is greater than the 3%. Therefore, as a buyers agent, I would generally not suggest their deposit be more than the 3%. In some cases buyers may not have 3% and in that situation a smaller deposit may be necessary. Customarily buyers will offer deposits from 1-3%. Some important things to consider may be understanding that along with other important aspects of a buyers offer, sellers generally view buyers deposits as an indication as too their motivation and commitment to purchase. Therefore in multiple offer situations the offer with the greater deposit may get some additional consideration. Lastly, if my buyer is inclined to try and get the property for much less than the listing price, I again may suggest he offer a higher deposit just to help offset the sellers reaction to the lower offer.
I hope this information is helpful.
Brad

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November 12 2011
A surprising amount of deals go together with $1,000 and $2,000 in the Chicago suburbs.
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November 12 2011
Profile picture for JohnWilt
If you are a buyer I would recommend no more than 1-2% of the purchase price.  I have great success with just 1% and sometimes less.  Your financing and other contingencies protect your earnest money (as long as you perform).  A seller's agent would tell their seller client you would get it back anyway if you couldn't get financing, etc.  So, there is really no need to offer much more.  If you are a seller I strongly suggest having your broker and if no broker your attorney held earnest money in escrow.
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November 12 2011
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It varies areas to area. In my area private party sales like to see at least 1-2% in earnest money while REO's like to see about 5%.
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November 12 2011
There does not seem to be a 'typical' EM these days. It use to be 5 or 10%, but now I frequently see 5 or 10K and on many short sales/foreclosures, particularly if a cash transaction, 1K. However it deos depend on the price and is always negotiable.
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November 12 2011
 
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