Deposit

A deposit, otherwise known as earnest money is money a buyer gives to an attorney, a brokerage, or an escrow agent on behalf of the seller (but never the seller directly) to show their seriousness in buying a seller's property. A deposit is generally required to be paid within a few days of the acceptance or signing of the contract, and it can only be refunded under certain circumstances, so in addition to the contract itself, deposits bind the buyer to their responsibilities in the transaction.

There is no 'set' amount required for a deposit, rather it is a condition of the offer and contract, but generally at least 1%-5% of a purchase price is put up for a deposit. Additionally, some states include an additional and much more immediate deposit of a token amount (it can be as low as $1,500) to encourage the seller to stop showing the property while the conditions of the contract are being worked out. Then, the rest of the deposit is made.

This document is a community edited guide, is not legal advice, and is subject to changes, modifications, and may contain inaccuracies or out-of-date information. As with any important financial transaction, consult a real estate professional and/or an attorney. See our terms of service for more information.

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