LOI Dilligence expectations & Earnest Money

April 06, 2026

by an investor from Purdue University - Krannert School of Management in Portland, OR, USA

I am going back and forth on an LOI and the broker is pushing for earnest money and diligence timelines under a month. I am working with a SBA Broker that is giving me timelines of 60 days to submit and 90 days to close. 2 questions. 1. What is a reasonable to hold a buyer accountable to in terms of earnest money? AKA, can't pull out except for financing contingency after X amount of time. 2. What is reasonable to hold a seller accountable to since I am going to be putting in meaningful due diligence resources? I see some LOI's with penalty clauses to reimburse for diligence costs but am unclear what specific scenario's outside of selling to someone else would trigger those expenses. Are there scenario's where just getting cold feet and pulling out would drive that as well or is that not usually done?

Reply by an intermediary
in New York, NY, USA

It needs to go both ways, if the seller walks during exclusivity for no reason (no retrade) then whatever $ figure is being put up by the buyer should also be paid by the seller, and both should be held in escrow. On timelines, 30 days of DD is not market for anything beyond a very simple deal, push for milestone-based progression tied to data room access and document delivery, so the clock doesn’t run while you’re waiting on the seller.

Reply by a searcher
from Rochester Institute of Technology in Portland, OR, USA

^redacted‌ feel free to DM me, we also had to put down an earnest money for our acquisition.

+3 more replies.

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