How to Make an Earnest Money Deposit on a Home

Video Transcript

"Making an earnest money deposit on a home is a simple task. I'm Richard Blake, and I'm here to explain to you how to make an earnest money deposit on a home. The first thing that you want to do is figure out how much you're actually willing to put in, in earnest money on this property. There really is no magic number as far as how much you should deposit. One thing to keep in mind is, is that the larger the deposit, or the larger the escrow, the stronger the offer is. So for example, in negotiating the contract or purchase price, you can actually use the escrow deposit as part of your negotiation tactic. Meaning, if you're going to low ball, or make a lower offer than what would be current market value, then you're going to want to make sure that your earnest money deposit is a bit higher than what it normally would be. And what it does is, it shows good faith, that you're a serious buyer, that you're not out there just throwing offers to see who would take them, who won't take them, and it shows that you've got money in your pocket. A lot of the times, sellers when they get a lower offers, they think it's because the person doesn't necessarily have money, so then they're going to just turn around and reject the offer, rather than counter offer it. But if they see that you have substantial amount put down in your escrow deposit, they're going to say, "hey, wait, this person does have money, let's negotiate this, let's counter offer", and then that way you've got your foot in the door to get a lower purchase price. Few different items go into this, as far as making the money deposit, the title company or the lawyer who closes the deal, or closes the real estate transaction is going to hold it for you, so you're going to actually bring it to their office, and they'll put it in a fund to be held in a third party escrow account until the day of closing. I'm Richard Blake, I'm here to explain to you how the earnest money deposit works. You have a great day."