Short answer: it’s not a downpayment (but can be used as part of it). It’s “skin in the game.”

Longer answer: earnest money is also known as “good faith money.” It’s money you as a buyer provide with an accepted offer that shows a seller you are serious about purchasing the property. You generally get this money back at closing. In Colorado, there are a number of protections for you as a buyer that enable you to get this money back if you choose to exit the contract. The seller only generally gets this money if all of your contractual protections have passed and you choose not to execute the purchase and/or something happens that affects the sale. Your buyer’s agent should keep you posted of these dates and what they mean for you and your earnest money.

Looking to buy, sell or rent a home in Colorado Springs? Call Rob at 719-440-6626 or email me at rob@rtrcolorado.com!