Wondering how much earnest money to offer on a University Place home? You are not alone. This deposit can strengthen your offer, but it also comes with rules, timelines, and risks. In this guide, you will learn what earnest money is, how it works in Washington, what makes it refundable, and how to protect your deposit from start to close. Let’s dive in.
Earnest money basics
What it is: Earnest money is a deposit you make after your offer is accepted to show good faith. In Washington, it is usually held by a neutral escrow or title company while the sale moves forward.
Why it matters:
- It shows the seller you are serious and helps secure the home while it is off the market.
- If the sale closes, the deposit is applied to your closing costs or down payment.
- If you breach the contract, the seller may be entitled to the deposit as compensation, depending on the contract.
How it differs from a down payment: The down payment is paid at closing. Earnest money is paid shortly after your offer is accepted to secure the agreement.
Typical amounts in Pierce County
There is no single required amount. In Washington and Pierce County, buyers commonly offer either a flat dollar amount or a percentage of the price. Ranges often fall from a few thousand dollars to several percent of the purchase price. Entry-level homes may see more modest deposits, while higher-priced or competitive listings may call for larger sums.
In multiple-offer situations, sellers in University Place often expect stronger terms, including a larger deposit. Aim for an amount that signals you are committed while fitting your budget and risk tolerance. Your agent can help you gauge what is typical for your price point and neighborhood.
Where your deposit is held
In Washington, earnest money is typically held by an escrow or title company named in your purchase agreement. Common delivery methods include a wire transfer, cashier’s check, or certified check. Personal checks may be accepted, but they can delay clearing.
Always get a written receipt from escrow and keep your confirmations. Treat wiring instructions with care and verify the company and account details using a trusted phone number.
Timing and key contingencies
Most Washington purchase agreements set a deadline to deliver earnest money, often within 1 to 3 business days after mutual acceptance. Delivering on time is essential to avoid claims that you are in breach.
Common contract contingencies that can protect your refund rights include:
- Inspection contingency. You can inspect the home and may cancel or negotiate within the agreed inspection window.
- Financing contingency. If your loan cannot be obtained under the agreed terms within the timeframe, you can typically cancel and recover the deposit.
- Appraisal contingency. If the home appraises below the price, you may have rights to renegotiate or exit.
- Title or survey contingency. Unresolvable title defects often allow cancellation with a refund.
- Sale of buyer’s property contingency. If you need to sell another home first, this protects you, though it is less common in competitive markets.
You usually must remove contingencies in writing by specific deadlines. Once you remove them, your ability to recover the deposit narrows except in limited cases like seller breach or failure to deliver clear title.
Refundable vs. non-refundable
Refundable scenarios may include:
- You cancel within a valid contingency period, such as inspection, financing, appraisal, or title.
- The seller breaches the contract or cannot provide marketable title.
- Both parties sign a mutual release of funds.
Potentially non-refundable scenarios include:
- You cancel after removing contingencies or after deadlines pass without contract authority.
- Your contract includes a liquidated damages clause and the seller elects to keep the deposit due to buyer default.
- You materially breach the contract or misrepresent key facts.
Your contract language controls refundability. Ask your agent to explain each clause and deadline before you commit.
How it protects you and the seller
Earnest money protects both sides:
- For sellers: It deters casual offers and provides a defined remedy if a buyer defaults, especially when a liquidated damages clause applies.
- For buyers: A meaningful deposit strengthens your offer, and the contract’s contingencies give you clear exit paths when legitimate issues arise. Funds held by neutral escrow reduce the risk of misuse.
A simple buyer timeline
While every contract is unique, many Pierce County deals follow a similar rhythm:
- Offer accepted → earnest money due per contract, often within 1 to 3 business days
- Inspection period begins at acceptance and commonly runs 5 to 10 days
- Loan processing and financing contingency period often runs 21 to 30 days
- Appraisal occurs during loan processing; any shortfall may prompt negotiation
- Contingencies removed in writing by set deadlines
- Closing day: escrow applies your deposit to your closing funds
Always follow your contract’s exact dates and instructions. When in doubt, ask your agent to review the calendar with you.
Best practices for University Place buyers
Before you write an offer:
- Ask your local agent what is typical for earnest money in your price range and neighborhood.
- Consider the competition level. In multiple-offer settings, a larger deposit can help.
At offer submission:
- Specify the deposit amount clearly and note any proposed non-refundable portions.
- Name the escrow or title company and confirm how you will deliver funds.
After acceptance:
- Deposit promptly and get a written receipt from escrow.
- Track and calendar each contingency deadline.
- Do not remove contingencies until you are confident you want to proceed.
Security and fraud prevention:
- Confirm wiring instructions by calling a verified phone number for the escrow company, not a number from an email.
- Keep all transfer confirmations and escrow receipts.
If a dispute comes up:
- Ask escrow to hold funds while the parties seek a mutual release.
- If the parties cannot agree, escrow may interplead the funds into court and the matter can move to mediation, arbitration, or litigation. Consult a local real estate attorney for advice.
Liquidated damages and disputes
Many Washington purchase agreements include a liquidated damages clause. This can limit the seller’s remedy to keeping the earnest money if the buyer defaults, subject to the clause language. Whether this applies in your deal depends on the exact form and the box or options selected. Your agent should walk you through how this clause works before you sign.
When buyers and sellers disagree about the deposit, escrow typically requires a mutual release to disburse funds. Without agreement, escrow can turn to the courts to decide who is entitled to the money. The fastest path is often a negotiated mutual release, but you should seek legal guidance for your situation.
Wired funds: avoid fraud
Wire fraud is a real risk. Protect yourself by following a few simple steps:
- Call a known, verified number for the escrow company to confirm instructions.
- Never rely solely on emailed wiring details.
- Send a small test wire if your bank allows and verify receipt.
- Reconfirm the final wire amount and recipient before sending closing funds.
Local resources and forms
In University Place and Pierce County, standard practices often follow guidance from Washington REALTORS and the Northwest Multiple Listing Service. Escrow and title companies provide written procedures for deposits and receipts, and your lender’s timelines will shape financing and appraisal steps. For legal questions or contested deposits, consult a local real estate attorney.
Putting it all together
Earnest money is a key part of buying a home in University Place. The amount you offer should match your goals, budget, and the competition around you. Track your deadlines, use your contingencies wisely, and protect your funds with careful delivery steps. With clear guidance and a solid plan, you can write a confident offer and keep your deposit working for you.
If you are weighing how much to offer or which contingencies to include, schedule a Free Consultation with Greg Pubols for local, step-by-step guidance tailored to your budget and timeline.
FAQs
How much earnest money is typical in University Place?
- There is no single rule. Buyers often use a few thousand dollars to several percent of the price, adjusted for competition and property price point.
When is earnest money refundable in Washington?
- It is commonly refundable if you terminate under a valid contingency, like inspection, financing, appraisal, or title, and do so within the contract deadlines.
Can I lose my deposit after inspection?
- If you cancel within the inspection period under the inspection contingency, you typically get a refund. Canceling outside that period can put your deposit at risk.
What happens to my earnest money at closing?
- Escrow applies it to your closing costs or down payment, and you bring any remaining funds needed to close.
How do I protect against wire fraud when depositing earnest money?
- Confirm wiring instructions by calling a verified escrow phone number, never rely only on emails, and keep receipts for every transfer.
