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.
Common questions
How much earnest money is typical in Michigan?
Usually 1–3% of the purchase price, held in escrow by a title company or broker and credited toward your 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 one and you can forfeit it to the seller.
Does a bigger earnest deposit help my offer?
It can signal seriousness in a competitive market, but only risk what you could lose if the deal collapses outside a contingency.
Related terms