Ever wonder how much earnest money you need to compete in Seattle and what happens to it if things change? You are not alone. This deposit plays a big role in getting your offer accepted and protecting your interests if the deal does not move forward.
In this guide, you will learn what earnest money is, typical amounts in Seattle and King County, when it is refundable, and how to protect it. You will also get practical steps you can use in your next offer. Let’s dive in.
What is earnest money?
Earnest money is a good‑faith deposit you pay after your offer is accepted. It shows the seller you are serious and gives them a reason to take the home off the market while you move toward closing.
Your deposit is credited toward your purchase at closing. It can reduce what you owe for your down payment and closing costs. If you default under the contract, the seller may be allowed to keep the deposit or pursue other remedies, depending on the contract.
Typical amounts in Seattle
In Seattle and across King County, buyers often offer about 1% to 3% of the purchase price as earnest money in many situations. In multiple‑offer scenarios, buyers sometimes make stronger offers with 2% to 5% or more. Cash buyers may also choose larger deposits to stand out.
Here is a quick example. On a $700,000 home, 1% equals $7,000 and 2% equals $14,000.
How and when you pay
Most local transactions use standard Washington forms that set your timelines after “mutual acceptance,” which is when both parties sign. The contract usually requires delivery of earnest money to the named escrow or title company within a short period, commonly 1 to 3 business days. The exact deadline is whatever you and the seller agree to in the contract.
Common delivery methods include wire transfer and cashier’s check. Personal checks may be accepted by some escrow companies, but wires and cashier’s checks are often preferred for speed and verification.
Where your deposit is held
Your earnest money is held in a trust account by the escrow or title company, or less commonly in a broker trust account. Those funds stay put until closing or until both parties give written instructions to release them. Without mutual written agreement, a court order, or a contract release provision, escrow will not release the funds.
When it is refundable
Whether you get your deposit back depends on the contract and whether you act within the required timelines. Many Washington contracts include contingencies that protect your right to a refund if you cancel correctly and on time.
Contingencies that protect you
- Inspection contingency. If you cancel during the inspection period or cannot agree on repairs within the contract timeline, the deposit is typically refundable.
- Financing contingency. If you cannot secure your loan within the set period and cancel per the contract, you may be entitled to a refund.
- Appraisal contingency. If the appraisal comes in low and contract conditions are not met, you can usually cancel and recover the deposit if you follow the required steps.
- Title issues. If title problems are not cured in time, you can cancel and receive your funds back.
- Seller default. If the seller fails to perform, you typically can recover your earnest money.
Timing and notice rules matter. You must provide any required cancellation notices in writing and before the deadline. Missing a date can turn a refundable deposit into a forfeitable one.
When you could forfeit it
- You default after removing contingencies or after deadlines pass. Many contracts include a liquidated damages option that lets the seller keep the earnest money as the agreed remedy if you default. Whether this option is selected is negotiated in the contract.
- You do not follow the contract’s notice procedures. For example, failing to deliver written cancellation by the deadline can put your deposit at risk.
If a dispute arises about who gets the funds, escrow will usually hold the money until both parties sign a release or a court or arbitrator directs disbursement.
How to protect your deposit
You can set yourself up for a smooth process by planning your cash flow, documenting every step, and meeting your deadlines.
Budgeting tips
- Treat earnest money as part of your cash‑to‑close. You will pay it early in the process, but it is credited to you at closing.
- In normal conditions, plan for at least 1% of the purchase price. In competitive situations, budget 2% or more if needed to strengthen your offer.
Delivery and safety
- Verify wiring instructions directly with the escrow or title company using a known, trusted phone number. Do not rely on email links.
- Ask for written confirmation that escrow received your funds and placed them in a trust account.
- If a broker trust account is used, confirm how and when the funds will be transferred to escrow.
Keep contingency rights intact
- Track every deadline on your calendar, including inspection, appraisal, financing, and title review periods.
- Send any termination or extension notices in writing before the deadline and keep proof of delivery.
- If you want more protection, ask for longer contingency periods or clear cure timelines when negotiating.
Negotiation moves that work
- Split the deposit. Offer a smaller initial deposit within the first few days and a larger follow‑up deposit later or after a specific condition is met. This only works if the seller agrees.
- Offer a larger deposit but keep parts of it expressly refundable under specific contingencies. Clear contract language is essential.
If financing or appraisal shift
- Communicate early with your lender and the seller. If more time will help, request an extension before deadlines expire.
- Consider whether you can cover an appraisal gap with additional down payment if it aligns with your strategy and budget.
If there is a dispute
- Escrow typically will not release funds without mutual written instructions. If you believe you canceled under a valid contingency, gather your documents and consult your agent.
- Keep inspection reports, lender denial letters, appraisals, and communications as evidence. These records help resolve disagreements.
Example: planning for a $700K home
Here is how you might plan earnest money for a $700,000 purchase in Seattle:
- Normal market: 1% deposit, about $7,000.
- Competitive market: 2% to 3%, about $14,000 to $21,000.
- Aggressive multiple‑offer scenario: 3% to 5% or more, depending on your risk tolerance and strategy.
In each case, make sure the contract reflects the right contingencies for your situation and that you understand the deadlines. Confirm where the money will be held and how it will be delivered. Protect your deposit by following the notice requirements exactly.
Final thoughts
Earnest money is a powerful tool in Seattle’s market. The right amount helps your offer stand out, and the right contract terms protect your deposit if you need to cancel within your contingencies. Plan your cash, verify wire details, and meet every deadline. That is how you keep your purchase on track and your deposit secure.
If you want local, step‑by‑step guidance on deposit strategy and offer terms across Greater Seattle and the Eastside, reach out to Spruce Home Group. We will walk you through timelines, contingencies, and negotiation options so you can move forward with confidence.
FAQs
How much earnest money is common in Seattle?
- About 1% to 3% is common. In multiple‑offer situations, 2% to 5% or more can be used to strengthen an offer.
Is earnest money different from the down payment?
- Yes. It is a deposit credited to you at closing. Your down payment is paid at closing and reflects how much you are financing.
When do I pay earnest money in Washington?
- After mutual acceptance. The contract sets the deadline, commonly 1 to 3 business days, but it depends on what is written in your agreement.
When is earnest money refundable in Seattle?
- It is typically refundable if you cancel under a valid contingency on time, such as inspection, financing, appraisal, or title issues.
Can the seller keep my deposit if I default?
- Possibly. If you default after removing contingencies or after deadlines, contracts often allow the seller to claim the deposit, sometimes as liquidated damages.
What if we disagree about releasing the funds?
- Escrow usually holds the deposit until both parties sign a release or a court or arbitrator directs disbursement.
