What to Look For in an Earnest Money Deposit Platform

What to Look For in an Earnest Money Deposit Platform

An earnest money deposit platform is a safe, secure, and convenient way for buyers to send earnest money during a real estate transaction. Many real estate brokers already prefer using these platforms with their clients instead of banks.

What is earnest money?

An earnest money deposit is a deposit made by a buyer to show that they are serious about buying a property. The deposit is typically a small percentage of the purchase price of the property and is held in escrow by a third party, such as a real estate agent, lawyer, or title company.

If the buyer – in good faith – fails to go through with the purchase, the earnest money is typically returned based on the contingencies agreed between the buyer and seller. In the usual case, as the sale goes through, the earnest money is applied to the purchase price or used to pay closing costs.

Historically, buyers have had to pay their earnest money deposit directly to the seller, the seller’s real estate agent, or an escrow company. This deposit was typically paid in the form of a certified check, cashier’s check, or wire transfer. Personal checks were generally not accepted.

Nevertheless, this often led to confusion about who was holding the deposit and whether or not it was refundable if the sale fell through.

Financing a new home purchase, inspection contingency

 Many first-time home buyers are concerned about how to finance their home purchases. This also includes finding initial liquidity to pay their earnest money deposit.

An advantage for first-time home buyers is that there usually is a financing contingency included in the home purchase contract, which protects the buyer in case they’re unable to obtain a mortgage loan. Once the borrower has secured a mortgage loan, the earnest money deposit is applied to the closing costs. In case the home loan is not approved, the earnest deposit is typically returned to the prospective buyer.

In addition, an inspection contingency is included in the purchase agreement to protect both the buyer and the seller and ensures that the home is in the condition that it was represented to be in.

Why an Earnest Money Deposit Platform is Better Than a Bank

There are a number of reasons why an earnest money deposit platform is a better option than a bank.

First, earnest money deposit platforms are designed specifically for real estate transactions. This means that they are familiar with the intricacies of the home-buying process and can provide both buyers and sellers with the guidance and support they need.

Second, earnest money deposits are refundable if the sale doesn’t go through. So, if a buyer has a change of heart or the home doesn’t meet their expectations during the home inspection, she can get her earnest money back, provided she acted in good faith and based on the contingencies agreed between buyer and seller in the sales contract.

Third, earnest money deposits are a good faith deposit that shows the seller that a buyer is serious about buying the home. This is especially important in today’s real estate markets, where there are many buyers competing for the same home.

In addition, an earnest money deposit is a way to secure financing for a home purchase. A first-time home buyer typically needs between 5 – 20% in down payment that lenders require. If the prospective buyer has an earnest money deposit, she can normally use it as part of her down payment. This can help her get approved for a mortgage loan.

Furthermore, an earnest money deposit is a way to lock in the purchase price of a home. If a buyer is worried about rising mortgage rates or the potential for the sale price of the home to go up, an earnest money deposit can help her lock in the price.

A Secure Platform

The real estate industry is, unfortunately, subject to high levels of fraud. Cybercriminals seek to target both real estate brokers and buyers because of the constant exchange of personal information and the large amounts of funds involved in real estate purchases.

How Much Earnest Money is Secured?

The earnest money deposit, which is also sometimes called a good faith deposit, is paid upfront to secure the purchase agreement. The amount of earnest money a buyer needs to pay varies but is typically 1-2% of the home’s sale price. In a hot real estate market, however, a buyer might need to put down as much as 10% of the purchase price.

Escrow Account

This deposit is placed in an escrow account and is typically held by the title company, lender, or escrow company. The deposit shows the seller that the buyer is serious about buying the home and has the means to do so. In return, the seller takes the home off the market and agrees not to sell it to anyone else.

If the buyer backs out of the home purchase for any reason other than the home not passing inspection or failing to obtain a mortgage, she will forfeit her earnest money deposit. However, if the home sale doesn’t pass inspection or fails to obtain a mortgage and still acting in good faith, she has the option to back out of the purchase and have her earnest money refunded.

Seamless and Convenient

Some earnest money platforms have a steep learning curve, while others are very simple to use. Obviously, you want to choose a platform that is easy to use not just for the employees within your organization but also for your clients that will be using the platform to initiate earnest money deposits and other transactions. Some platforms will enable you to schedule a demo so you can see for yourself how it works and whether it will be easy to grasp.


An earnest money deposit platform isn’t going to be very useful if it isn’t compliant with many banks. Therefore, you’ll want to ensure that the platform you are interested in works with a wide range of banks across the nation so that your clients will be able to initiate a transfer easily.

Dollar Transfer Limits

An ACH transfer platform is supposed to be quicker than a bank. Check to see what the estimated time is for funds to be delivered into a bank account once a transfer has been made. You’ll also want to check what the maximum transfer limit is. If you are used to dealing with clients that often make high-dollar transactions, you’ll need to ensure that the ACH transfer platform will allow it.

White-Label Branding Options

If you’re a real estate agent or broker looking for a better way to manage earnest money deposits, paymints.io can help. With its ease of use and robust set of features, it’s the perfect solution for streamlining the homebuying process.

Wouldn’t it be nice if a client signed in to the earnest money deposit platform and saw your branding? Some platforms will allow you to customize the look of the platform with your own logos and colors so that it appears as if the platform is your own product. This looks more professional and gives the client more confidence when they are initiating a transfer.

Paymints.io is safe, secure, and supports more than 12,000 banks across the nation. The platform also offers multiple plans as well as the option to build and customize your own plan. It is the ideal platform for the real estate industry.

To learn more about how our earnest money deposit platform works, schedule a free demo today!