Dear Monty: We want to make an offer on a home in Wisconsin. Our real estate agent wants us to put $10,000 down as earnest money. She said it would show the sellers how much we like the house and may be an influence if there is another buyer. While the advice could be accurate, we are still determining if the sellers will accept our offer or other potential events that may develop. We would appreciate your thoughts.
Monty’s Answer: The history of earnest money deposits goes back a long way. Wikipedia states: “In the Middle Ages, the earnest payment was called an earnest penny, Arles penny, or God’s silver (in Latin: Argentum Dei). It was either money or a valuable coin or token given to bind a bargain, notably for the purchase or hiring of a servant.” In today’s world, there is no requirement for earnest money to bind a bargain in any state. Earnest money is seen as a gesture of good faith. Still, it is often assumed to be an integral component of an offer….