What is Earnest Money? Earnest money is “Good Faith” money that show’s your intent to purchase a home. Typically, homebuyers earnest money will be 1-2% of the purchase price. This is money that could be lost if the buyer defaults on the purchase contract. However, if they uphold their end of the contract, it will go towards their downpayment or closing costs. The more earnest money that is pledged, the more serious a seller will receive your offer.
Your earnest money is due to a third party, (in Arizona it would be the title company) within 48 hrs of an accepted contract. There are a couple of ways that this money can be given. You can wire the money to the title company (not advised). You can make a personal check or cashiers check out to the title company. However, you cannot give cash to the title company. That’s one thing they won’t accept as funny as that sounds.
In Arizona, where the purchase contract is very buyer friendly. There are five contingencies that allow the buyer to get their earnest money back, should they cancel the contract. To learn more about those five buyer continencies, read my blog article here