Ever wonder what actually happens to your good-faith deposit once your offer gets accepted? Here’s the breakdown so you know exactly where your money is going and how it’s protected.
When you make an offer on a home, you’ll typically include what’s called a good-faith deposit—or earnest money deposit—to show the seller you’re committed. It’s like putting skin in the game. This amount usually ranges from 1% to 3% of the purchase price. That depends on where you’re shopping, the kind of home you want, and how competitive your offer needs to be based on the market. But here’s the key: that money doesn’t go to the seller. It’s held securely in a neutral escrow account at a title company and it just sits there—untouched—until the deal closes.
Now, a lot of buyers worry they’ll lose that money, but in most cases, you won’t. If everything goes as planned, that deposit gets credited toward your total down payment or your closing costs. It’s not extra money you’re spending—it’s part of what you were already planning to pay.
And if something causes the deal to fall apart—like for example an inspection that reveals serious issues, or you’re denied financing from your lender despite a contingency—your contract usually allows you to back out and get that deposit refunded, assuming those protections are still in place.The bottom line? It’s a powerful tool to strengthen your offer, but it’s also designed to be fair and safe for you as a buyer. If you want me to walk you through exactly how much you’ll need for a good-faith deposit and how it’s protected, DM me the word “DEPOSIT” and I will walk you through the process.
