How much earnest money should you have to put down on a 950k apartment building?

Answer 1

Different agents approach the question of earnest money in different ways. Some consider it little more than a formality and will tell you to put down some token amount.

Others look at earnest money as one of the tools to make an offer more attractive to a seller.

You have to find a balance that you're comfortable with. Any amount you put down as earnest money is at risk if the deal comes apart. Even if you eventually get it back, and unhappy seller can tie it up for months, so some folks want to keep the amounts as small as possible.

But there is no doubt that a check going into escrow for five or even ten percent of the purchase price will get a seller's attention in a very good way.

Remember that one of the reasons deals fail it because it turns out that the buyer really didn't have the resources to make it come together. A large earnest money check goes a long way to alleviating that fear.

Also, it's just human nature to be impressed with bigger numbers. Even if your offer is a bit lower than another one, that big earnest money check means that you are a person to be considered.

I have seen cases where my client's bid was accepted even though the difference between our offer and the higher offer was more than the amount of earnest money we put forward. The listing agent told me after the deal closed that it was that big check that made the difference.

And in reality, it cost my client nothing at all. We even got interest on the money while it was in escrow.

Answer 2

Earnest money is simply to bind your offer as legal. A couple thousand should do.