earnest money check

When writing an offer, there are many factors that are considered to be important, such as price and closing dates. One of the often overlooked items that appear in the purchase agreement is earnest money, the topic of today's post.

DO YOU REALLY NEED IT?

First off, earnest money, or good faith money is not required in Ohio. However, it is a way to convey your commitment to purchasing a home and is expected by local sellers. Sometimes it can even make a difference in whether or not a seller accepts an offer.

Buyers always ask us how much they should offer. There is no set rule on this although we do recommend at least 1-2% of the purchase price. So, for example, earnest money on a $300,000 offer would be $3000-$6000. Again, there's no set rule on this and you could certainly go above or below this threshold if you'd like, it's just a gauge we use.

Some buyers, especially first timers, are always a little reluctant to give any money up front because they often don't understand how it works. There is actually very little risk in offering earnest money. The money is held by a third party, not given directly to the sellers. If for some reason the deal doesn't work out for a legitimate reason, the money gets returned to the buyers.

IT CAN MAKE A DIFFERENCE

Earnest money is a way to show your commitment and can actually be a deciding factor. I have been on the listing side of a transaction where we received two offers that were similar in price. The sellers felt that the buyer who offered a significant amount of earnest money was more serious and chose to work with them.  This may be a rare case, but is something not to be taken lightly.

When all is said and done, price is likely the most important thing to a seller. However, showing your strength as a buyer can make a difference so it's worthy to discuss earnest money with your agent