Earnest money is the deposit a buyer places in escrow to demonstrate serious intent. Typical LA multifamily earnest money is 1–3% of purchase price.
Earnest money is held by escrow and applied toward the purchase price at close. During the due diligence period, the deposit is typically refundable; after diligence, it becomes at risk if the buyer walks for non-contractual reasons. Higher earnest money signals stronger buyer commitment. Institutional buyers sometimes place higher earnest money to out-compete other offers.
LA multifamily earnest money structures in 2026: 1% initial (refundable during diligence), stepping up to 2-3% after diligence (non-refundable). On a $6M deal, initial earnest money is typically $60,000, increasing to $120,000–$180,000 after diligence.
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