All About Earnest Money

What is earnest money?

Earnest money is a deposit a buyer makes to show their commitment to purchasing a property. Buyers typically make this deposit when submitting an offer or within 2-3 days of going under contract, and the money is held in escrow until the transaction closes.

This deposit reassures the seller of the buyer’s intent to buy the property. By putting some financial stake into the transaction, the buyer strengthens their offer. The amount of earnest money can vary based on factors like local market conditions, the property’s price, and the seller’s preferences.

Once the seller accepts the offer, a neutral third party, such as an escrow company, closing attorney’s office or a real estate agent, holds the earnest money. This ensures the funds are safe until the transaction closes. At closing, the earnest money usually goes towards the buyer’s down payment or closing costs.

Both buyers and sellers need to understand the terms and conditions related to earnest money. If the buyer fails to meet their obligations under the purchase agreement, they may lose their earnest money deposit. Conversely, if the seller fails to meet their obligations, the buyer may be entitled to a refund.

Overall, earnest money is crucial in real estate transactions. It provides security for both parties and helps ensure the transaction proceeds smoothly. Buyers and sellers should consult with a real estate professional to navigate the process and address any questions about earnest money.

How can earnest money be paid?

There are several different ways to handle the payment of earnest money when it comes to real estate transactions. It’s important to note that the specific payment methods accepted may vary depending on the Closing Attorney company or earnest money holder involved in the transaction. It’s always a good idea to consult with your Advisor to determine the preferred payment method for your particular situation.

Here are a few options:

1. By website: In recent years, technology has made its way into the real estate industry, offering new payment methods. If you are utilizing Weissman PC as your Closing Attorney, their website offers a safe, secure and free portal to submit your earnest money. If you are using a Closing Attorney other than Weissman PC, please reach out to your Thrive Advisor for further guidance.
2. By wire transfer: Another option is to pay earnest money through a wire transfer. This involves electronically transferring the funds from your bank account to the designated account of the earnest money holder. Wire transfers are a secure and efficient way to handle large transactions. *Be sure to obtain the wiring instructions directly from the Closing Attorney office.
3. By check: One common method is to pay earnest money by check. This involves writing a check for the specified amount and dropping it off at the Closing Attorney office or earnest money holder’s office. If you choose this option:
   • Please be sure to write the address of the property in the memo line of the check.
   • Please make sure to get a paper “Earnest Money Receipt” when you drop off your check.
   • You can drop your check off to whoever is attending the front desk when you walk in. A list of all Weissman offices can be found here. 
   • Most Closing Attorney offices are open 9am – 5pm, but you may want to call them to confirm.