What are the do’s and don’ts of offering earnest money in a transaction?

searcher profile

July 25, 2025

by a searcher from Duke University - The Fuqua School of Business in Atlanta, GA, USA

I’m in the process of evaluating a deal and would appreciate insight on how experienced buyers approach earnest money. Specifically: • When is it appropriate (or not) to offer earnest money in an acquisition? • What’s a typical or reasonable amount to offer relative to deal size? • How can earnest money be structured to protect the buyer—e.g., contingencies, escrow terms, refund triggers? • What are the common pitfalls or risks to avoid when agreeing to earnest money terms? Would love to hear how others have approached this and what’s considered standard (or smart) in the current market.
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commentor profile
Reply by a professional
from North Central College in Chicago, IL, USA
I have never heard of earnest money in a reputable transaction, the buyer is spending significant capital on diligence and term sheets/LOIs have termination clauses so earnest money is not a market term
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Reply by a searcher
from Southern Illinois University at Edwardsville in Laramie, WY, USA
DON'T
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