Here’s what you need to know about earnest money deposits in our market.
In the extreme seller’s market we’re in right now in San Diego County, many buyers are asking what an earnest money deposit is. An earnest money deposit is money that goes into escrow within the first three days of your offer getting accepted; it shows good faith and intentions to the seller. If you put down a strong earnest money deposit, the seller will think you’re motivated; if you put down weak earnest money, the seller may think you aren’t fully committed to purchasing their home.
The earnest money deposit is incorporated into your down payment at closing—it isn’t any extra money you’re paying. It’s also completely refundable if you choose to walk away from the deal. The caveat is that in California, we have three contingencies to a sale, and if you get to the end of your contingency period, have removed all contingencies, and have no other strong reason to cancel the sale, the seller might get to keep the earnest money if you walk away. The seller has to get your written permission to keep the money. However, they can take you to small claims court to get it if you refuse.
“An earnest money deposit is money that goes into escrow within the first three days of your offer getting accepted.”
Bonus tip: When you’re competing against multiple people, an excellent way to help your offer stand out is to make a portion of your earnest money deposit non-refundable from the beginning. Of course, if it’s too much money and you need it, I wouldn’t recommend that, but if you can, show your strong intentions upfront.
If you have questions about earnest money deposits or anything else concerning our market, please reach out via phone or email. I would love to help you.