What Is Earnest Money?
Earnest money is a good faith deposit made by the buyer to show they're serious about purchasing a property. It's submitted after your offer is accepted and is held in an escrow account until closing.
Why It Matters
- Shows the seller you're committed
- Gives you time to complete inspections, appraisals, and financing
- Helps make your offer more competitive — especially in a hot market
How Much Is It?
- Typically 1% to 2% of the purchase price in Tennessee
- Can vary based on local norms, property price, or how competitive the market is
- The exact amount is written into the Purchase & Sale Agreement
What Happens to Your Earnest Money?
- Held in an escrow account, usually by the listing brokerage, title company, or attorney
- It's credited back to you at closing — often applied to your down payment or closing costs
What If the Deal Falls Through?
You may get your earnest money back if:
- You cancel within a contingency period (inspection, appraisal, financing, etc.)
- The seller fails to meet contract terms
You may lose the deposit if:
- You back out without a valid reason under the contract
- You miss a deadline or breach the agreement