When it comes time to write your offer - you're going to have to make a lot of decisions in a very short period of time. So it's a good idea to educate yourself in advance! When you write an offer on a house I'm going to say - how much earnest money do you want to offer? And you might wonder WTF IS SHE TALKING ABOUT? So earnest money is NOT required by law. But it IS customary in our market.

 Earnest Money is used to show the seller how serious you are about buying their property. You're SO SERIOUS that you're willing to put some skin in the game. You're willing to put your money where your mouth is, so to speak.

The amount of earnest money is up to you. A common amount we see is $1,000 - but it's totally up to you. Sometimes sellers, especially builders, will dictate how much earnest money they want you to offer - and that's your choice if you want to comply. Then it's their choice if they want to accept or counter offer.

Your earnest money will usually be kept in the listing broker's trust account - but that is also negotiable. But it will be held in a trust account somewhere until closing at which point you'll see a credit on your side of the settlement statement for the earnest amount.

Let's say you have a home inspection and you find the house is built on an Indian burial ground. Obviously, that's not going to happen - it's an exaggerated example. So, you probably aren't too excited to live in a house on an Indian burial ground, right? Per the contract, you need to make a written request to FIX this material defect. And the seller isn't going to be able to fix that. So in this crazy example, you could walk away from the deal and get your earnest money returned.

Then there's the appraisal contingency. If you're getting a loan for your new home, the bank is going to send a 3rd party appraiser out. In the event, there's an appraisal issue and you and the seller can't come to terms on it - then you could walk away from the deal and the earnest money will be returned to you.

And there's the financing contingency - if for some reason your loan doesn't get approved - then you're not likely going to be able to buy the house and your earnest money will be returned to you. HOWEVER, let's say you wake up the day before closing and decide you'd rather move to California and not buy this house at 123 Main St. Well, in that case you're going to forfeit your earnest money and that's the price you pay for being a flake. Whenever you break the contract for a reason that's NOT written into the contract you can plan on losing your earnest money.