How to Buy a Home Without Earnest Money

Earnest money describes the amount of money that the buyer submits to the seller with an offer to purchase a home. There is no hard and fast rule about the amount to deposit, although 1 percent to 2 percent of the purchase price is typical. In many cases, you can buy a home without offering earnest money by getting a seller to waive this requirement.

Many home buyers confuse earnest money with a property's down payment. Earnest money shows the buyer you are serious about purchasing the home and it indemnifies the seller against expenses he might incur should you back out for reasons other than those stated in the contract.

The down payment, on the other hand, is a lender requirement. Even if you are obtaining a mortgage that requires no down payment, such as through government programs, the seller will still expect an earnest money deposit. While buying a home without providing an earnest money deposit isn’t impossible, it is quite challenging and very rare.

Ask your real estate agent to call the listing agent and request a waiver of the earnest money deposit. Most sellers won’t agree to this, but it’s worth a try.

Purchase a for-sale-by-owner (FSBO) home. Because these homeowners are typically less traditional than those who hire agents to sell the home, they may be more amenable to waiving the earnest money deposit.

Purchase a home with cash and commit to a quick close. This may convince a seller to waive the earnest money deposit, particularly if you have a contract in hand.

Purchase a seller-financed home isn't a guarantee that the seller won’t demand an earnest money deposit. It is, however, an easily negotiable deal for the "motivated seller" who is ready to close ... as long as you're equally ready to close on the purchase.

Buy a home with a lease-purchase. In this scenario the buyer promises to purchase the home within a particular time frame. Although earnest money is typically requested, you may find a seller who will waive it. Be aware, however, that if you fail to perform the seller may take you to court.

Don’t confuse this process with the lease-option. The lease-option process requires what is known as “option consideration” money, typically an amount substantially larger than a standard rental security deposit.