If you’ve never bought a home before, real estate terminology can feel overwhelming. One term you’ll hear early in the process is earnest money — and understanding it can help you feel far more confident when making an offer.
Here’s what buyers in Panama City Beach need to know.
What Is Earnest Money?
Earnest money is a good-faith deposit made when you submit an offer on a home. It shows the seller that you’re serious about purchasing their property.
Typically, earnest money is:
- About 1–3% of the purchase price
- Submitted shortly after your offer is accepted
- Held securely until closing
The exact amount can vary depending on market conditions and the specific property.
What Happens to Earnest Money at Closing?
Earnest money is not a bribe and it doesn’t disappear. When you reach closing, that money is applied as a credit toward your closing costs or down payment.
In other words, it’s money you would likely be paying anyway — just paid earlier in the process.
Can You Get Earnest Money Back?
Yes — if your contract protects you.
Common situations where earnest money is typically refunded include:
- Financing doesn’t go through
- The seller can’t close
- The home inspection reveals unacceptable issues
These protections are written into the contract through specific clauses, which is why having a knowledgeable local agent matters.
When Might a Seller Keep the Earnest Money?
If a buyer backs out of a contract without a valid reason outlined in the agreement — for example, simply changing their mind — the seller may be entitled to keep the earnest money.
Bottom Line
Earnest money is designed to protect both buyers and sellers — and when handled correctly, it’s simply part of a smooth, well-managed transaction.
Buying a home in Panama City Beach? Connect with Gulf Life Real Estate and get clear guidance every step of the way, so you can make strong offers with confidence.
Contact Gulf Life Real Estate and start working with a professional who can help you navigate all aspects of the home buying process!
