Earnest Money in Chicago Can Vary from $1,000 to $100,000+
Earnest money is a deposit made by buyers to prove that they are committed to the real estate purchase. If buyers back out of a purchase without good cause (e.g. can’t get financing, unacceptable inspection) in Chicago, they can lose their earnest money.
Last week one developer in downtown Chicago that my buyers and I visited asked for 10% of the sale price for earnest money with an offer. When I later shared with him that my clients won’t have that amount of cash available until they close on the sale of their house, the developer asked for 5% of sale price with the offer and another 5% due after attorney review.
Another developer asked for no earnest money with the offer, but 10% of the sale price would be due 2 days after attorney review.
I’ve found that resale sellers are often satisfied with a few thousand dollars due at contract acceptance and increased to 5% of sale price 2 days after attorney review, but a seller I submitted an offer to last week countered with a request for earnest money equal to 10% of sale price after attorney review.
Sellers of lower priced resale homes are often satisfied with $1,000 due at contract acceptance.
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ABOUT THE AUTHOR
Fran Bailey shows, previews and tracks downtown Chicago homes for sale. Fran has been quoted in numerous Chicago and national publications. To schedule showings for any listings, get a free market analysis for your home or to contact Fran email her at fran.bailey@bairdwarner.com or call 773.793.4516. Learn More
{ 2 comments… read them below or add one }
Thank you for the post. It seems the amount of earnest money required will always differ depending on the seller.
Brian Hayes
chicago-home-loans
Thanks for sharing your experience. It seems the developers want more “skin in the game” upfront than maybe in the past few years. My guess is that they are trying to determine who is serious and who is just “window shopping”. I know you have probably run into this, but there is nothing more frustrating than the “serial home offer” by the same client moving from property to property until they finally believe that they have gotten the best deal.
However, there are some developers that might be missing an opportunity for cash strapped home buyers. I see a lot of clients getting gift funds for the downpayment…More so in the past. These funds aren’t always readily available..