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May. 2, 2009 - Earnest Money = How Earnest ARE you?

I just did a Twitter search for the term "earnest money" and found this tweet:

"working on making an offer on a house. Short sales take a while. Getting an addendum so there's no earnest money deposit"

Remember, the amount of Earnest Money answers the question "How EARNEST are you?" That's what Earnest Money IS!.

Maybe yours is the only offer today, but a short sale can normally take offers all the way to closing.  What will happen if someone comes along with a lower offer and $50,000 Earnest Money, saying they are WAY more "earnest" about buying this house than you are?

No earnest money depost = zero commitment to purchasing...in the literal sense. Why leave that door so wide open for another buyer to walk through and beat you out with?

Of course if you don't really want the house, and are not committed to buying it if the lienholder approves your offer, then "no earnest money deposit" is appropriate.

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Dec. 27, 2006 - Earnest Money Deposit

How Much Should it BE??  Looking back over the year, I have used everything from $1,000 to $50,000.  I haven't used less than $1,000 in over ten years, so let's call that the minimum.  $50,000 means you you reall want this house and there's no chance in hell you are going to change your mind about that!

While the seller benefits little whether it is $1,000 or $50,000, the seller is still impressed by the big numbers.  It tells them you are seriously committed to making it to the end.  That is a very important message to send...when it is true.  But if you have any reason to expect that you might change your mind, keep the number as small as possible...which is at $1,000. 

If you exceed your cash needs at closing with the Earnest Money Deposit, you will get the difference back at closing, assuming of course, that you DO close.

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ARDELL DellaLoggia of Sound Realty on Seattle Real Estate process and market including Kirkland, Bellevue, Redmond, Green Lake and most areas around the top of Lake Washington North of Downtown Seattle. Phone: 206-910-1000 - Mailto:ARDELLd@gmail.com

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