loader image
Close
Mobile Full Width Tablet Small Desktop
  • Home
  • About
    • All About Theory
    • Meet the Team
    • Theory Companies
    • Theory Cares
    • Fill The Barrel
    • Blog
  • Buy
    • Buy With Theory
    • 2023 Homebuyer Guide
    • Home Buyer Bus Tour
    • Your Guide to the PNW
    • Featured Listings
    • Home Search
    • Sign In
  • Sell
    • Sell With Theory
    • Free Home Estimate
    • 1 Hour Cash Offer
    • Sold By Theory
  • Invest
  • Construction
  • Property Management
  • Careers
  • Contact
  • About
    • All About Theory
    • Meet the Team
    • Theory Companies
    • Theory Cares
    • Fill The Barrel
    • Blog
  • Buy
    • Buy With Theory
    • 2023 Homebuyer Guide
    • Home Buyer Bus Tour
    • Your Guide to the PNW
    • Featured Listings
    • Home Search
    • Sign In
  • Sell
    • Sell With Theory
    • Free Home Estimate
    • 1 Hour Cash Offer
    • Sold By Theory
  • Invest
  • Construction
  • Property Management
  • Careers
  • Contact

What is Earnest Money?

You’ve found the perfect home and are ready to make an offer. There’s a surefire way to let the seller know you mean business — make sure you include an earnest money deposit. This is one of the many terms you will encounter in a real estate transaction – and an important one too! So what is it exactly? Earnest money is a deposit that a buyer pays to show the seller they’re serious about their offer. It is simply a sum of money showing the buyer’s “good faith” in a transaction. Both the buyer and the seller want to make sure the deal goes through. An earnest money deposit helps give the deal solid footing.

Is earnest money a legal requirement to buy a home?

Technically, no… but it’s a good idea if a buyer wants to make their offer competitive. From a seller’s point of view, a buyer will think twice about backing out of a deal if they’ve got money at stake. That kind of built-in financial security makes sellers feel more at ease when accepting an offer. In fact, in our current local market, it’s rare not to include an earnest money deposit.

How much earnest money do you need?

Earnest money amounts vary by geography and can range from $500 to 5% of the purchase price of the home. It really depends on the type of home you’re purchasing. We suggest speaking with your real estate agent to decide how much money you’d like to include with your offer. If the seller accepts your offer, an escrow account will hold your earnest money deposit until closing. At this point, the deposit will apply to your (the buyer’s) down payment and closing costs.

Is earnest money ever nonrefundable?

Real estate contracts include timelines and responsibilities for both buyers and sellers. Buyers risk losing their earnest money deposit when they don’t comply with the contract’s terms. Meanwhile, sellers lose valuable time on the market. Here’s how you, a prospective buyer, can protect your earnest money:

  • Make sure you include contingencies for financing and inspections in the contract. Without these, the earnest money deposit could be forfeited if you can’t get financing or you find a serious problem during the inspection.
  • Read, understand, and abide by the terms of the contract. For example, if the contract states the home inspection must be completed by a certain date, you must meet that deadline. If you don’t, you risk losing the deposit – and the house.
  • Make sure you handle the earnest money deposit appropriately. The deposit should be payable to a reputable third party. For example, a well-known real estate brokerage, escrow company, title company, or legal firm. You should verify an escrow account will hold your funds and always obtain a receipt.

Depending on the market, a seller may negotiate that the deposit is nonrefundable after a certain number of days. In addition, in markets where sellers receive multiple offers on their home, you may even want to agree to a nonrefundable deposit. This may make your offer that much more attractive. But again, we would recommend speaking with your real estate agent to see if this would make sense for you. 

What is Earnest Money?

“

“I think that’s the easiest it’s ever been for me to buy or sell a home!”

Brad Rasmussen -

“

We had a distressed property in Tacoma that required a lot of repair before we could sell. The task soon became overwhelming and that’s when we contacted Theory Real Estate.  They purchased the property “as is”. Within 3 weeks,  we closed on the deal. The Theory team is amazing!!  Every person we came in contact with was friendly, professional and efficient.

John and Diane Simchuk -

“

We are new investors to this market. We met Isaac and Alan through a good friend, and we are so thankful to have met them. They are the nicest, caring, most professional, kind-hearted people we have met in a long time. We would recommend these guys to ANYONE.

Anthony & Sarah Wooden - Tacoma

“

We have bought 2 homes and sold 1 home with Theory. We would recommend them to all our friends.

Rhonda & Rickey Wilks - Buckley

“

We worked with Theory to find our perfect house, but ran into a couple obstacles with the seller. The Theory team was always there with answers and went above and beyond all of our expectations.

Ceirra & Kenny Williams - Spanaway

LET'S GET SOCIAL

Imagine it: you've just gotten off work, you make Imagine it: you've just gotten off work, you make the quick commute home with easy access off I5, it's summer time & hot as can be...you drive into your 2-car garage, open the custom made front door to your house & AHHHH air conditioning.📍 1431 Grindstone Dr SE, Olympia
💰 $480,000
👣 1,946 sqft
🛏 4
🛁 3Now it's time to let your pet outside into your spacious fenced yard, put some food on the grill, & chill in your cozy living room. Can you picture it? Good. Because there's more: 4 huge bedrooms upstairs, including a massive primary bedroom big enough for all your king-sized furniture(or a sitting area). REAL hardwood floors throughout main level, fresh interior paint throughout, and a couple of nearby playgrounds round out this awesome house. This is the best deal around!
Tranquil and highly desired 55+ community located Tranquil and highly desired 55+ community located in the heart of Kent with easy access to public transit, shopping ,dinning and parks.📍 1510 Maple Ln Unit #19, Kent
💰 $110,000
🛏 2
🛁 2Within the community you will have entry to the Green River where you can fish or take in evening sunset of the beautiful Northwest. Inside enjoy spacious open living , dining and kitchen open to one another. A large primary Bedroom with 3/4 bath and spacious secondary bedroom. Enjoy 2 covered decks, this home also includes an outside locked storage and space for 2 parking spots on carport. This charming double wide is sure to be the next place you call home!
Taking time to connect with our team makes us stro Taking time to connect with our team makes us stronger. We celebrated Pi Day last week with happy hour at Pint & Pie in Downtown Tacoma. Work hard, play hard!
We're looking forward to hosting our next Tacoma C We're looking forward to hosting our next Tacoma Connect all about Airbnbs and Boutique Hotels. We have a 🔥 🔥 lineup of expert panelists, and as always we'll have some awesome live music. If this is an industry you have a passion for or are interested in becoming a part of, we'd love to see you here!🗓 Wednesday 4/12
⏰ 6 PM - 9 PM
📍 Edison Square (5415 South Tacoma Way)
🎟 Tickets at TacomaConnect.com
⭐️ Sponsored by Team Justice - Paramount Residential Mortgage
Help us wish Aaron a very happy Birthday! We're th Help us wish Aaron a very happy Birthday! We're thrilled to have you on the Theory team and love watching you grow! 🥳
Pending Sale: This magical rambler in the Echo Gle Pending Sale: This magical rambler in the Echo Glen community has a fabulous open and spacious floor plan, that boasts of U-shaped kitchen with tons of counter space.📍 6642 57th Avenue SE, Lacey
💰 $460,000
👣 1,807 sqft
🛏 3
🛁 2The living room is right off of the kitchen which is a great space to cozy up next to the fireplace. This home has an additional den/bonus room and dining room which make this home ideal for entertaining! Vaulted ceilings and skylights create a light and airy feel. The primary room features a 5-piece bath with jetted tub and a nice little walk in closet. Rare oversized lot with a newer furnace and AC!!! Welcome Home!!
What a great evening to CONNECT! If you joined us What a great evening to CONNECT! If you joined us for the latest Tacoma Connect on "Building your dream business", let us know what your favorite part of the event was!
Calling all investors & house hackers! INCREDIBLE Calling all investors & house hackers! INCREDIBLE opportunity for a townhouse style duplex in Puyallup!📍 12602-12604 119TH St Ct E, Puyallup
💰 $774,950
👣 2,648 sqft
🛏 6
🛁 5Conveniently located near freeway access, shopping, entertainment, & more! Each side has a spacious 3 bed 2.5 bath layout & access to backyard space. Entry opens up into the living room that pours into the dining area & kitchen w/ bar top seating. Half bath on the main floor along w/ a dedicated laundry room & access to the attached 2 car garage! Upstairs features the primary room w/ an ensuite, 2 more bedrooms, full bath, & a small bonus/flex room! Plenty of off street parking for both units in the driveway that fit 3 cars for each side! Both sides have gas fireplaces! 1 YEAR HOME WARRANTY INCLUDED!

Office

5413 South Tacoma Way
Tacoma, WA 98409

Phone

253-537-HOME

Email

hello@theoryRE.com

© 2023 Copyright Theory Real Estate.  |  Privacy Policy  |  Site by Deep Root Design