Are you wondering how earnest money works when you buy a home in King County? You are not alone. This deposit can influence how strong your offer looks and how protected your funds are if plans change. In a few minutes, you will understand what earnest money is, how much buyers here typically put down, when it is refundable, and how to structure it to fit your goals. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit that shows you are serious about buying a home. Once the seller accepts your offer, the deposit becomes part of the purchase and sale contract. If you close, it usually goes toward your down payment or closing costs.
How it works in Washington
The purchase and sale agreement sets the deposit amount, when it is due, and what happens if the deal does not close. Standard forms used across Washington often include strict deadlines, sometimes with “time is of the essence” language. Meeting the timelines in your contract is key to protecting your deposit.
Where your deposit is held
In King County, funds are commonly held by a neutral escrow or title company. In some cases, they may be held in the seller’s broker trust account or another agreed escrow holder. The contract names the escrow holder and includes instructions for how funds will be handled.
How much is typical in King County
There is no set amount for earnest money. Local practice varies by price point and how competitive the listing is. Your strategy should reflect the property, your comfort with risk, and the current market.
Common ranges in Seattle and the Eastside
For many buyers in King County, deposits often fall into one of two patterns:
- A modest flat-dollar amount for lower-priced or less competitive listings, such as a few thousand dollars.
- A percentage-based deposit for higher-priced or more competitive homes, often in the low single digits of the purchase price.
These are common patterns, not rules. Your exact number should align with your budget and the strength you want your offer to show in Seattle, Bellevue, Kirkland, Redmond, or Mercer Island.
When a larger deposit helps
In tight seller’s markets, sellers look for signals that a buyer will close. A larger earnest deposit and shorter contingency timelines can help your offer stand out. The tradeoff is that your deposit may be more at risk if you later default or waive key protections.
Timing and delivery
Earnest money is typically due within 24 to 72 hours after mutual acceptance. Your contract will state the exact deadline and delivery method. Buyers often use a wire transfer to escrow, a cashier’s check, or sometimes a personal check. Bank policies can affect when funds clear, so plan ahead.
When earnest money is refundable
Refundability hinges on the contract and whether you act within the agreed timelines. Most outcomes fall into three categories: refundable, forfeited, or disputed.
Inspection contingency
If you cancel within the inspection period, or you and the seller cannot agree on repairs and you terminate on time, the deposit is typically refundable. Work within the inspection deadline and send written notices as required by the contract.
Financing and appraisal
If your loan is denied despite your good-faith efforts and the financing contingency is active, you can usually recover your deposit. If the appraisal comes in low and you terminate per the appraisal contingency within the window, that can also allow a refund. Keep records of your lender applications, communications, and any denial letters.
Title issues
If title defects are identified and cannot be cured within the contract timeline, invoking the title contingency often results in a refund. Follow the notice procedures and deadlines in your agreement.
Waiving contingencies increases risk
If you waive inspection, financing, or appraisal protections and later decide not to close, your deposit may be forfeitable as liquidated damages or subject to the seller’s claim for breach. Only waive protections if you fully understand the risk and have a clear plan to close.
Deadlines and notices matter
Contract timelines in Washington forms are often strict. Missing a deadline can turn a refundable deposit into a deposit at risk. Calendar every date in the contract, confirm delivery methods for notices, and keep written proof when you send or receive documents.
How escrow handles disputes
Escrow companies follow written instructions and the terms of the contract. If the buyer and seller agree in writing, escrow will disburse funds accordingly. If there is a dispute, escrow will usually hold the funds until the parties reach agreement or a dispute-resolution path is completed.
If the parties disagree
When buyer and seller disagree on who should receive the deposit, escrow typically retains the money until there is a mutual release or a formal resolution. This protects both parties while avoiding improper disbursement.
Mediation, arbitration, or court
Many purchase agreements call for mediation or arbitration before litigation. If talks fail, a party can seek a court decision or ask escrow to interplead the funds so a court can decide. Because formal disputes take time and money, many parties prefer to resolve issues through mediation.
Protect your funds from wire fraud
Wire fraud is a real risk in real estate. Use these steps to safeguard your deposit:
- Verify wiring instructions by calling the escrow or title company using a phone number from their official website or your signed documents, not from an email.
- Confirm receipt of funds with escrow and save the confirmation.
- Consider a cashier’s check if wiring makes you uneasy, and plan for any bank hold times.
Smart strategies to structure your deposit
Align your earnest-money plan with your goals, liquidity, and market conditions. A thoughtful structure can keep your offer competitive while protecting your funds.
Match deposit size to market conditions
- Tight seller’s market: Consider a larger deposit and tighter timelines, but pair that with clear contingency plans and prompt scheduling.
- Balanced or buyer-leaning market: A modest deposit and stronger contingency protection are common and can still win if your overall terms are solid.
Use staggered deposits
Some buyers make a smaller initial deposit at acceptance, then a second deposit after clearing a key milestone like inspection or loan approval. This can boost the perceived strength of your offer while time-limiting your exposure. Any staggered amounts and dates must be written into the contract or an addendum.
Consider appraisal gap language instead of waiving
If you want to stay competitive without waiving appraisal protection, you can offer to cover a specific portion of an appraisal shortfall. Clear caps and timelines help both sides understand the risk. This can preserve some refund potential if the gap is larger than expected and you terminate within the contingency period.
Backup offers with clear terms
Submitting a backup offer can position you for a home that already has an accepted offer. Make sure your contract states exactly when your deposit becomes due and active. This approach can limit immediate risk while keeping you in the running.
Document everything
Keep a simple paper trail in case you need to show good-faith effort or confirm a timely termination:
- Escrow receipt for your deposit and any bank confirmations
- Inspection scheduling, reports, and written notices
- Lender application timelines and any denial letters
- Date-stamped emails or e-sign logs for notices and addenda
Eastside scenarios to make it real
Bellevue new-construction buyer
You are eyeing a new-construction home in Bellevue with multiple offers. You decide on a larger deposit and a short inspection window, but you keep financing and appraisal contingencies. You also structure a second deposit that is due only after the inspection is removed. This shows strength without putting all funds at risk on day one.
Kirkland resale with uncertainty
You find a resale home in Kirkland. Inventory is steady, so you choose a modest deposit, full inspection period, and financing protection. You deliver the deposit within 48 hours to a neutral escrow company and keep proof of receipt. Your offer is accepted because the seller values certainty and clear timelines.
Mercer Island backup offer
You submit a backup offer on a Mercer Island listing. Your contract states the deposit is due only if the first buyer’s deal fails and your offer moves into primary position. This gives you a shot at the home without tying up funds unnecessarily.
What to expect at closing
At closing, earnest money is not a separate fee. It appears in the escrow accounting and is applied to your down payment and closing costs. You will see it on your closing disclosure. Title and recording are separate items handled by escrow, and your deposit does not get recorded in public records.
Final thoughts
Your earnest-money plan should reflect both the market and your risk tolerance. Know your deadlines, use contingencies wisely, and verify every wire. If a dispute comes up or you need contract guidance, talk with your broker’s managing broker or a real estate attorney to understand your options. If you want a tailored strategy for Seattle and the Eastside, we are here to help.
Ready to align your offer strategy with your goals? Connect with The Sessoms Group for a concierge consultation and a clear plan from offer to closing.
FAQs
What is earnest money in a King County home purchase?
- It is a good-faith deposit you make after your offer is accepted, held by escrow or a broker trust account, and credited to you at closing if the sale completes.
How much earnest money do buyers typically put down in Seattle and the Eastside?
- Buyers often put down a few thousand dollars to a low single-digit percentage of the price, depending on the property and market conditions.
When is earnest money due for King County transactions?
- It is commonly due within 24 to 72 hours after mutual acceptance, with the exact deadline stated in the purchase and sale agreement.
Is earnest money refundable if I cancel after inspection in Washington?
- If you cancel within the inspection period according to your contract terms, the deposit is typically refundable. Follow notice rules and deadlines.
What happens to my deposit if my loan is denied in King County?
- If your financing contingency is active and you made a good-faith effort but receive a denial within the timeline, your deposit is usually refundable.
How does an appraisal contingency affect my earnest money?
- If the appraisal is low and you terminate within the appraisal contingency window, your deposit is typically refundable. Waiving the contingency raises risk.
Who decides where the earnest money goes if there is a dispute?
- Escrow holds the funds until the buyer and seller agree in writing or a dispute process like mediation, arbitration, or a court decision directs disbursement.
How can I avoid wire fraud when sending earnest money in Washington?
- Call the escrow or title company using a verified phone number to confirm wiring instructions, then confirm receipt and keep documentation.
