Earnest Money Explained For Seattle Homebuyers

Confused about earnest money in Seattle? You are not alone. This small but important deposit can make your offer stronger and protect you when things do not go as planned. In this guide, you will learn what earnest money is, how it works in King County, what is typical in Seattle, and smart steps to keep your money safe. Let’s dive in.

What earnest money is

Earnest money is a good-faith deposit you include with your offer to show a seller you are serious. It is not the same as your down payment, but it is credited toward your closing costs and down payment at closing. The funds are held by a neutral third party, usually the title or escrow company named in your Purchase and Sale Agreement. Your contract explains when the deposit is refundable and when the seller may keep it.

How it protects you and the seller

Your deposit gives the seller confidence to accept your offer and take the home off the market. It also creates clear rules in the contract for what happens if either party does not perform. If you cancel for a reason allowed by a contingency within the deadline, you typically get your earnest money back. If you default after contingencies expire, the seller may be able to keep the deposit as damages, based on the contract language.

Typical Seattle amounts

Nationally, earnest money often falls in the 1 to 3 percent range, but Seattle varies based on price point and competition. For many median-priced homes, buyers often offer several thousand dollars, such as 5,000 to 15,000 dollars. In higher-priced or multiple-offer situations, deposits can reach into the tens of thousands, such as 20,000 to 100,000 dollars or more. For example, on a 600,000 dollar home, you might see 6,000 to 20,000 dollars. On a 1,200,000 dollar home, it could range from about 12,000 dollars to 50,000 dollars or higher depending on the market.

What affects your amount

• Market heat and competition in the neighborhood and price band
• Your price point and local norms for that area
• Whether you are waiving contingencies like inspection, appraisal, or financing
• Your available cash and lender requirements
• Seller preferences or any minimum amount noted in listing remarks

When and how to pay in King County

Most Seattle-area contracts require you to deliver earnest money within a set time after mutual acceptance, often within 1 to 3 business days. Some buyers include it with the offer, while others deliver it right after the offer is accepted. If it is not delivered on time, the seller may have contract remedies, which can include canceling the deal.

You can usually deposit funds by wire transfer, cashier’s or certified check, or sometimes a personal check depending on the escrow company’s policy. Wire transfers are common, but wire fraud is a real risk. Always verify wiring instructions directly with your escrow officer using a known phone number, not just an email.

Contingencies and refunds

Buyer-protecting contingencies

Common contingencies in Seattle include inspection, financing, appraisal, and title review. Some buyers also include a sale-of-home contingency, which is less common in highly competitive situations. Each contingency has a deadline. If you cancel properly within that period, your earnest money is typically refundable under the contract.

When it is refundable vs. forfeited

Your deposit is usually refundable if you cancel within a valid contingency window and follow the process in writing. It may be forfeited if you miss a deadline, fail to perform after contingencies expire, or do not close without a contract reason. If the buyer and seller disagree about who should receive the funds, escrow may hold the money until both parties agree in writing or a legal directive is provided.

If the seller defaults

If the seller breaches the agreement, such as refusing to close without a valid reason, you can typically recover your earnest money and may have other contract remedies. The exact outcome depends on the contract terms and the facts of the situation.

Disputes and releases

Disputes can arise if a buyer cancels after a deadline or does not provide required notices. In many cases, the parties sign a mutual release to direct escrow on how to disburse the funds. Without a mutual release, escrow may hold the deposit until the parties resolve the dispute or a court orders a release.

Choosing your amount: a simple framework

• Check local conditions: Ask your agent about current competition in your target neighborhood and price point.
• Balance strength and risk: Larger deposits can strengthen your offer, but they increase your exposure if you default after contingencies.
• Confirm your liquidity: Make sure the deposit will not leave you short for appraisal gaps, down payment, or closing costs.
• Match the strategy to the offer: Full contingencies often pair with more modest deposits, while waived contingencies often pair with larger deposits.

Steps to protect your deposit

• Keep key contingencies when possible, or understand the risks if you waive them.
• Track every deadline, and deliver notices in writing before the cutoff.
• Get written confirmation from escrow when your funds are received.
• Verify wire instructions by phone using a trusted number for the escrow or title company.
• Save all documents, including receipts, emails, and contingency notices.

Real-world examples (illustrative)

• Scenario A, balanced: List price 700,000 dollars. You offer 710,000 dollars with 1 percent earnest money, about 7,100 dollars, plus inspection and financing contingencies. You stay competitive while limiting risk.
• Scenario B, aggressive: List price 700,000 dollars. You offer 720,000 dollars, waive inspection, and include 25,000 dollars in earnest money. Your offer stands out, but your risk increases if you back out without a contract reason.
• Scenario C, all-cash: You put down a larger fixed deposit, such as 40,000 dollars, and plan to close quickly. The seller sees strong commitment and speed.

Key takeaways for Seattle buyers

• Earnest money shows the seller you are serious and is credited to you at closing.
• In Seattle, deposits often range from several thousand dollars to tens of thousands, depending on price and competition.
• Your contract controls when the money is refundable and when it can be forfeited.
• Careful planning, clear timelines, and wire safety steps help protect your deposit.

If you want a calm, local perspective on earnest money strategy for your offer, reach out to Ryan Hoff. You will get clear guidance tailored to your price point, neighborhood, and goals.

FAQs

How much earnest money is typical in Seattle?

• Amounts often range from several thousand dollars to tens of thousands, influenced by price point and competition. Nationally, 1 to 3 percent is common, but Seattle varies.

When is earnest money due after an offer is accepted in King County?

• Most contracts call for delivery within 1 to 3 business days after mutual acceptance, unless your offer specifies a different timeline.

Is earnest money the same as a down payment?

• No. It is a good-faith deposit held by escrow and credited to you at closing. Your down payment is separate and comes from your closing funds.

Can I get my earnest money back if financing falls through?

• Often yes, if you have a financing contingency and you cancel properly within the deadline and follow the contract steps.

How do I avoid wire fraud when sending earnest money in Seattle?

• Always confirm wiring instructions by calling your escrow or title company at a verified phone number. Do not rely only on email instructions.

What happens if the seller backs out of the deal?

• If the seller defaults, you can usually recover your earnest money and may have other remedies under the contract, depending on the terms.