When buying a home, would you consider asking the sellers to “hold” their home off the market without offering to give them an earnest money deposit? As a seller, would you take your home “off the market” for purchasers who were unwilling to make an earnest money deposit?
In both cases, the answer is probably “No!” A very important message is communicated from the buyer to the seller by the earnest money deposit. It is understandably common for homebuyers to want to offer as small a deposit as possible when signing an agreement to purchase a home, and just as common for the sellers to want as large a sum as possible to be placed on deposit.
Here’s why the amount offered can be so important. For the buyers, one way to impress the sellers with their sincerity is by offering a higher than normal earnest money deposit. Their willingness to go beyond the minimum requirements is a positive indicator that they plan to complete the purchase on time and within the terms of the agreement.
From the sellers’ point of view, a solid offer to purchase from the buyers — when accompanied by a substantial earnest money deposit — can quickly become an attractive offer, one which has a good chance of being accepted.
In our current market, the buyers need to understand that they will be competing for the home with other qualified buyers in a multi-offer situation. If all the offers have very similar terms of price, possession, and pre-approval letters, the large earnest money deposit can really impress the sellers and influence them to take that buyer’s offer. In a nutshell, a larger than expected earnest money deposit can bring success for the buyer and a sense of security to the seller.