Earnest money is an amount that you put down at the time you make the offer to demonstrate that you are serious about buying the house. It should be a substantial amount and countrywide averages from 1% to 5% of the purchase price. However, that amount varies by the area of the country and local customs. In a buyer’s market, the earnest money amount is usually much lower than in a seller’s market.
If the offer is accepted the earnest money becomes part of the down payment on the property. Who actually holds the earnest money while the deal is going through depends on local custom also. In some areas the money is placed in an account held by the real estate office or an attorney. Your real estate professional will explain the local customs of earnest money to you.