Earnest Money is an amount of money you put down once your offer has been accepted. It is traditionally held in a client escrow account by either your agents brokerage or the other agents brokerage. There is no advantage to who holds it. The money is kept in that account until the day you close, where it is released to the seller and if you back out of the contract by reasonable means, such as an issue with the inspections, you should get your money back. The release of earnest money must be agreed upon by both sides if there is dispute. 

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When it comes to how much to put down when you submit your offer, there are a few items to consider. How expensive is the house? How much money do you have and how badly do you want the home? How long has it been on the market? Are there other offers on the home?

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Depending on your situation and the the property are looking to purchase, your agent can guide you, but ultimately it is your decision for how much to put down. The saying goes, "how earnest are you?". This is a traditional reflection on the more earnest you are, the more you will want to put down. Larger earnest money deposits show the seller stronger intent to follow through. There is also a greater likelihood that your offer will hold together with a larger earnest money deposit.

 

All things considered, you want to make sure you still have some wiggle room with your personal finances before you commit to putting down a lump sum. Often, first time buyers are in the $1,000-$2,000 range unless they feel strongly about the home and have the ability to comfortably put more. Rest assured that this money is included in your down payment, so if you are using a loan that requires a percentage down, then you can consider it working towards the downpayment :)

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