Process
Earnest money
A good-faith deposit a buyer puts down when making an offer, held in escrow and applied to the purchase at closing — showing the seller you're serious.
What does earnest money mean?
Earnest money is the deposit that signals a serious offer, typically 1–3% of the price in Michigan, held by a title company or broker in escrow. At closing it's credited toward your down payment and closing costs.
If you back out for a reason covered by a contingency — financing, inspection, appraisal — you generally get it back; if you walk without one, you can forfeit it to the seller.
In competitive markets, a larger earnest deposit can strengthen an offer, but only risk what you could lose if the deal falls apart.
A Michigan example
On a $285,000 offer, a 2% earnest deposit is $5,700, wired to the title company holding it in escrow. It's not an extra cost — at closing it's applied to your down payment and closing costs.
Common questions
How much earnest money is typical in Michigan?
Usually 1–3% of the purchase price — roughly $2,850 to $8,550 on the $285,000 median home. It's held in escrow by a title company or broker and credited toward your down payment and closing costs at closing.
Do I get my earnest money back if the deal falls through?
Generally yes if you back out under a contingency — financing, inspection, or appraisal. Walk without a valid contingency and you can forfeit the deposit to the seller, so keep those protections in the contract.
Is earnest money the same as a down payment?
No. Earnest money is a good-faith deposit made with your offer, while the down payment is your total cash toward the price at closing. But the earnest money isn't lost — it's applied toward that down payment and your costs.
Related terms