Questions? Fill out the form below to speak with a commercial real estate loan specialist. If a commercial real estate deal successfully goes through, in the vast majority of cases, the earnest money will be credited toward the purchase price of the property. If the seller pulls out of the agreement, however, earnest money is nearly always refundable. Some sellers and contracts may allow a refund if the financing doesn't come through. Often it is not refundable if the buyer is unable to complete the transaction - even if it's simply because the buyer failed to get the necessary financing. It depends on the contract the buyer has with the seller. For desirable assets in hot markets, a seller may ask for 5%, 10%, or even a 15% earnest money deposit to reserve a property. That said, there is no hard rule, as the amount required is completely up to the seller. When considering how much earnest money for commercial property is needed, it's usually set as a percent of the property's purchase price - between 1% and 3% in most cases. ![]() Putting down earnest money gives a buyer additional time to finish the approval process for a loan, order a property appraisal, and have property inspections and other third-party reports completed before closing on an acquisition. ![]() This amount is generally held in escrow until the deal is complete. Earnest money is money that the buyer gives the seller to show your good faith when making an offer to purchase the sellers property. How Does Earnest Money Work in Commercial Real Estate?Įarnest money is a deposit made to the seller of a commercial property in order to demonstrate the buyer’s intention to purchase the property.
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