Once you have come up with an offer price, the subsequent step is to decide how large a deposit you want to make with your offer. You want the earnest money deposit to be substantial enough to show the seller you are serious, but not so large you placing significant funds at risk.
One guideline to follow is to make a deposit that is less than two to three percent of your offered price. If your deposit is larger than that, the lender will pay particular attention to how you came up with the funds. Another reason to limit your deposit is just in case something goes wrong. Typically, significant problems are the exception and not the rule, they do occur. Just in case there is a dispute between you and the seller, the less money you have put into a deposit, the less funs at risk.
There are exceptions to this rule, as with practically everything else in real estate. During a hot market there may be multiple offers on the
that peak your interest. A large deposit may impress a seller enough so they will accept your offer instead of another buyer. Even if your unknown competitor is offering the same price or slightly higher, the seller may still select you because of your deposit amount. A large deposit may also convince the seller to accept a lower offer. More money up front may save you money later.
