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How Much Is Enough

In the distant past, real estate buyers and sellers were said to bargain in "good faith" or "in earnest". There was little need to write down the details of the agreement since, as they said then, "A man's word is his bond". Probably no money changed hands either until the sale was consummated.

Later it became common practice for real estate agreements to be in writing. Buyers offered "earnest money", as a visible sign that the buyer intended to complete the sale. The amount was usually small, but it's significance was great. Along with the written contract it took the place of a handshake agreement.


Today, an "earnest money" deposit is commonplace. Although the amount of money is negotiable between the buyer and seller, most agree that the larger the deposit, the more serious the buyer's intentions. After all, a genuine buyer, who sincerely intends to complete a sale, has no qualms about making a substantial deposit.

If a buyer willfully defaults and fails to complete the transaction, the deposit may be forfeited. From that point-of-view, sellers may look with suspicion upon buyers who refuse to provide a deposit or insist on a very small one.

When selling a home, ask your agent for advice about the amount of deposit you should require from buyers. Remember, there is no set of rules to follow, just good common sense.



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