# Earnest money

A deposit at signing, credited to the price or forfeited if you walk.

On main-street deals it is often small or waived entirely, and exactly what forfeits it is negotiated in the agreement rather than assumed from how house sales work. Read the outs before you sign: a deposit that survives a financing decline and a diligence walk is cheap credibility, while one that only returns if the seller defaults is a bet on an underwriting process you do not control. Where it is held matters too, since money in the broker's account and money in escrow behave differently when a deal turns sour.

In numbers: A $40,000 deposit held in escrow against a $4,000,000 [LOI](https://searchspheresource.com/glossary/loi) is 1% of the price, and the buyer's question is which of the agreement's outs return it: a financing decline, a diligence walk, or neither.

Source: https://searchspheresource.com/glossary/earnest-money
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

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