1% is a rule of thumb, but it can vary depending on how your contract is designed. A buyer's agent ,who represents your best interests, will be able to help you negotiate the contract which would include how much the earnest money will be. Do you have an agent representing you?

Best of Luck,

Rebecca Neighborgall

Hi N
I recommend 1 % as a rule, there are always exceptions. As a seller you want as much as you can to insure the buyers are serious, as a buyer you try to give as little as possible.
Michael

Earnest money is a way of showing that the buyer is not making a frivolous offer...an amount one would not want to lose. In the current market the deposit can be less than in a seller's market. As a buyer and seller you should probably consider the earnest money from both sides: that might make the 1-2% seem not so much!

It varies, 1% is usually the recommended amount but I've often seen less. There are other factors in play such as closing date. A seller will usually accept less earnest money if the closing date is sooner. If the buyer's loan looks secure, i.e. they are putting down a substantial amount of money, then the seller might settle for less earnest money. If there is a higher cost of repair contingency a seller will likely take less earnest money because that makes it harder for the buyer to walk away from the contact and get the earnest money back.. You should follow the advice of your own agent who can consider all of these factors when you submit your offer.

1% is very common around here

1-2% is the norm... but there are some variables based on regions; market indicators (like those already suggested); and even your own financing plan. If you are doing a VA no money down, for example, you may opt for a $1-2K, and the seller may consider this reasonable BECAUSE you are doing a no money down loan. The other consideration is the type of seller and risk for the seller. When I am a listing agent, I look at what my seller's carrying costs will be. If they are paying a $10K per month loan, then the EMD needs to be equal to what the risk is for my seller. So, if you want a 30 day close, then it's a $10K deposit. If you want a 45 day close, it's $15K. On the other hand, if the seller owes nothing on the property, carrying costs are low, and they may be able to risk it somewhat with a lower deposit. You see, there is the "rule of thumb" but not really a rule.

Previous poster is right - you should weigh the pros and cons with your agent. You have one of those, right?

1 to 2% can be very high, and I would recommend you consider the risk of loosing that money if something happens. Never put down more then you are comfortable risking. If the house has been listed for a while, and sales are slow in the neighborhood, you have more leverage then if sales are good and the house hasn't been listed long.

One thing to remember about Earnest Money deposits in NC is that if the deal doesn't close, BOTH parties must sign off on returning the funds, so if one party refuses to sign off on the return, the broker holding the money cannot disburse those funds. When this happens, the broker must follow guidelines set out by law, and after proper notification, turns the money over to the clerk of courts, and the buyers/sellers must petition the clerk of court for those funds. If a lawyer gets involved, often the expense of reclaiming those funds is greater then the funds themselves. And remember, if a deal runs into trouble, people get angry, and sometimes refuse to sign the paperwork just out of spite, even when the contract is followed correctly.

Don't forget you have an alternative to earnest money deposits, and that is the "option 2" option money. Have your buyer's agent (you have one of those, right?) go over that option with you. Many agents are not comfortable with this option, and really don't explain it to the buyer, but it's worth considering. To sum it up, you put down a smaller amount then normal earnest deposit, it goes to the seller, and you have the option of walking away from the deal for any reasons. There are some restrictions, but talk those over with your buyer's agent.

Daniel

In my experience, 1% is the minimum that most listing agents and sellers will consider to confirm that you are serious in your offer to purchase. Some regions of the country expect much more. You will be credited for the 1% at closing, which will be deducted from what you owe at closing. You can always ask your buyers agent to try to write your offer with a smaller earnest amount. However, unless the property has been on the market a long time, the seller will likely counter with a higher amount.

We just made an offer in the same area and were advised by our realtor to put down 1%...which is higher than what our lender advised us.