Ernest money means putting your money where your mouth is. If you wish to purchase a property, you have to make a deposit.
The question I most often get is, “How much?” This amount differs from state to region to agency to agent. No wonder buyers are confused. I would be too. I have had clients ask if $100 is acceptable. Well, they can ask but as a listing agent, I would have to advise my selling client not to take it. For the most part, your ernest money will average 1.5% to 3% of the purchase price. The deposit amount is a requirement of the “Liquidated Damages” provision in the contract. In a nutshell, this states that in the event the buyer breaches the contract, this amount can be any agreed upon, but to be presumed valid, it may not exceed the 3% of the purchase price.
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