In ancient times, the earnest payment was called an earnest penny, and also known as Arles penny, God’s penny, or Argentum Dei. It signified money given to bind a bargain, especially for the purchase or hiring of a servant.

Many measure good faith by the amount or willingness to put down earnest money. In all seriousness, do you think someone wouldn’t walk away from $100, $1,000 or $10,000 if they really didn’t want to buy it anymore? What if they are doing FHA finance and can not afford to put down the cash? Or 100% finance? I have one simple belief of earnest money, I hate it. Mixing money with emotion causes arguments, not resolution.

In all fairness, if the Buyer is putting down earnest money, what is the “earnest” that the seller puts down? Consider the following a solution:

Buyer agree to an amount the buyer can afford that does not conflict with buyers financing.

Seller agree to that amount, but make it non-refundable deposit when contingencies are cleared or a specific reasonable date which ever is sooner.

Clients always ask …

How much earnest money should I put down?

Will I get it back if I can’t get financing?

If it fails inspections will I get it back?

If I my life changes and I change my mind, will I get it back?

My normal conversation with Buyers and Sellers alike:

  1. Try not to put down more than you are willing to walk away from if it fails or you have a change in your life that changes your mind. Release of earnest money requires the signature of both buyer and seller. What if the other party will not sign? You both will get to fight over it. So consider not putting down more than you are willing to walk away from. Better yet, don’t put any down!
  2. Yes, if you have the contingency in your contract that should financing fail, and not to an action you took to make it fail, and you provide proper and timely notice, you should get it back. But remember the requirement of both buyer and seller must sign to release? Try just putting down walk away money or none.
  3. Yes, if you have the contingency in your contract that should inspections fail, and you provide proper and timely notice, you should get it back. But remember the requirement of both buyer and seller must sign to release? Try just putting down walk away money or none.
  4. Change in your life caused change in your mind? No, you should not be entitled to return of earnest money. Glad you only put down walk away money? What if you don’t want to sign to release to seller? Fight for it, as in seek resolution judicially.

As a seller, maybe you will feel better knowing a buyer is willing to put down $10,000 in earnest to purchase your property. Contingent on financing. Most sellers believe they will get that money if they do not buy. NOT TRUE. If financing failed, the buyers should get his money back, so long as financing failed NOT because of an action of the buyer.


A young man is told by a sellers agent (not Intermediary, NOT THIS OFFICE) that he must put down $10,000.00, he did, and the purchase was contingent upon financing. The young man’s financing failed, to no fault of his own. He should have gotten the money back, right? Yes, he should have.

Prior to deadline dates in the contract the sellers agent should have had contact with this inexperienced young man to help him interpret the terms he agreed to. It is not the agent’s job to explain the contract, that would be an attorney, but agents, in performing their duties, should keep parties apprised of status and deadlines impacting their contract terms.

This did not happen, the young man did not hear back from his lender, he did not ask for an extension in time, he did not know he had to. No written document was placed before him to release the money, yet, the Broker (sellers agent) went to the uninterested third party holding the money, a title company, and signed responsibility for the money and divided it half to seller, half to himself. No signature from young man.

The Broker that did this was reported and fined. Did the young man get his money back? No not yet. His recourse is to sue the Broker for the money. With the amount being $10,000 it is not small claims. Generally the cost of getting to court is 10-15,000. With the determination of the Broker’s guilt, it is likely he will prevail, but the young man may be in the hole after paying attorney’s fees. He could file in small claims, and likely recover the maximum $5000.00, then the Real Estate Commission can give the young man $4000.00, and suspend the Brokers privileges until restitution is made.


I was a Buyers Agent, my client put down $1,000.00, after we talked about earnest money. Contingent on financing. The Seller’s Agent was from another office. The money was held at the title company. The financing failed because the residence did not have a certified septic system, solely due to the fact the seller did not build it to the DEQ specifications and inspection failed and the seller refused correct it. A financing denial letter was supplied to the sellers agent. The sellers agent and her clients believed they deserved all of the earnest money because the seller had begun to move and had expenses. Of course, we believed the buyer should have it all returned. There was a finance contingency and no moving expense reimbursement. Neither party would sign to release to the other. We negotiated percentages for a month and finally agreed to a 50/50 split. My client was prepared to go to court, she believed firmly she should get her money back. I again explained walk-away money, and explained the cost of going to court, and the sour ugliness something like this causes in your life. She came back and agreed to offer 50/50, if they would not accept it, then she would sign off and let them have it. There was no earnest money on her next home offer, it was accepted, it closed and now they are happy in their new home.

Don’t let this happen to you. BE PRO-ACTIVE! If your agent says you have to put up earnest money – or how much – find a new agent that will work in your best interests.

So Buyers … don’t put more down than you are willing to walk away from.

And Sellers … ask for non-refundable deposit when contingencies are cleared.

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