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Earnest Money Escalation Calculator
Earnest money typically escalates through contingency removal.
Total earnest
$3,500,000
Initial amount
$350,000
Total % of purchase
0.10%
How the math works
Total earnest = purchase × (initial + 1st + 2nd + final escalations).
$35M × 10% = $3.5M total. Initial $350k + $700k + $700k + $1.75M staged through contingencies.
How to Use
- Enter purchase price.
- Enter initial earnest %.
- Enter first escalation %.
- Enter second escalation %.
- Enter final escalation %.
- Read total earnest money.
Frequently Asked Questions
Escalation structure?
1% at contract signing. 2-3% after inspection period. 3-5% after financing approval. 5-10% final (goes hard). Each tier becomes non-refundable on completion of the corresponding contingency.
Market norms?
Buyer's market: $25k-50k earnest (1-2% total). Balanced: 2-4% total earnest. Seller's market: 5-10% earnest, often non-refundable after short DD. Competition drives escalation sizes up substantially.
Risk considerations?
Non-refundable earnest at signing — highest buyer risk. Partial refund after DD — standard risk. Fully refundable until close — lowest risk but weakens bid. Institutional buyers accept more risk; syndicators sometimes cannot.
How often should I rerun this?
Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.
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