Earnest Money In Washington Explained

Making an offer on a home in Issaquah or the Eastside? Your earnest money can help you win the house, or cost you if you are not careful. If you are a first-time buyer, it is normal to have questions about how much to put down, when it is refundable, and how escrow handles it. In this guide, you will learn the local norms, key deadlines, and smart steps to protect your deposit from start to finish. Let’s dive in.

What earnest money is

Earnest money is a good-faith deposit you make when a seller accepts your offer. It shows you are serious about buying and gives the seller some security if you default. If the sale closes, the deposit is credited to your down payment and closing costs. It is not an extra fee when the purchase completes.

On the Eastside, earnest money can help your offer stand out in a competitive situation. A strong deposit and clear proof you can fund it can reduce risk in the seller’s eyes.

Local norms in Issaquah and the Eastside

There is no fixed amount required by law. Your contract sets the deposit. In many Eastside offers, buyers use a flat amount in the low to mid thousands, or about 1% to 3% of the purchase price on higher-priced homes. In hot multiple-offer situations, some buyers choose a larger deposit to strengthen their offer.

Most contracts require you to deliver funds quickly. A common timeline is 1 to 3 business days after mutual acceptance. The exact deadline is written in your Purchase and Sale Agreement.

Sellers may also look for proof you can deliver the funds on time. Many buyers include a recent bank statement or another proof of funds to support their offer.

How much should you offer?

Balance competitiveness with your risk tolerance. A larger deposit can make your offer more attractive, but it also increases what you could forfeit if you default. Consider your price point, how competitive the listing is, and the contingencies you plan to keep or waive.

When earnest money is refundable

Refundability depends on your contract contingencies and deadlines. If you cancel within the allowed time under a contingency, you can usually get your deposit back. Common protections include:

• Inspection contingency: You can negotiate repairs or cancel within the inspection period if you are not satisfied.
• Financing contingency: If you cannot obtain the specified loan despite good-faith efforts and cancel within the deadline, you can typically receive a refund.
• Appraisal contingency: If the home appraises low and you terminate under this contingency, your deposit is usually refundable.
• Title or HOA review: If there is an issue that is not cured in time, you can cancel per the contract.
• Other written contingencies: Examples include sale of buyer’s home or utility system checks.

If you remove contingencies and later back out, refundability is not guaranteed. Some contracts can label all or part of the deposit as nonrefundable at certain points. Make sure you know what you are agreeing to before you sign.

When a seller may keep earnest money

If a buyer defaults after removing contingency protections or misses key deadlines, the seller may be entitled to keep the deposit as liquidated damages if that clause is in the contract. Parties can also negotiate other remedies. If there is a dispute, the escrow holder will keep funds in the trust account until both sides agree, a court or arbitrator decides, or an interpleader process moves the funds.

How escrow holds and applies your deposit

In Washington, your offer names who will hold the deposit. On the Eastside, an escrow or title company typically holds earnest money in a trust account. The escrow company follows the written escrow instructions and your Purchase and Sale Agreement.

• You deposit the funds by the deadline in your contract.
• The escrow holder provides a receipt and keeps funds in a fiduciary account.
• If the deal closes, your earnest money is credited to your down payment and closing costs.
• If the deal cancels, escrow will only release funds based on a mutual written release, a court or arbitration order, or other allowed procedures.

Protect your funds from wire fraud

• Only wire to the escrow or title company named in your signed contract.
• Call a verified phone number for the company to confirm wiring instructions before you send money.
• Do not rely on email alone. Email accounts can be spoofed.
• Save your receipts and any written confirmations of deposit.

Step-by-step: earnest money timeline

1. Offer accepted: Your Purchase and Sale Agreement sets the earnest money amount and deadline.
2. Deposit due: You deliver the funds, often within 1 to 3 business days. Get a receipt from escrow.
3. Contingency periods: Complete inspection, loan, appraisal, title, and any other reviews by the deadlines.
4. Decision point: Proceed to closing, negotiate repairs or terms, or cancel within an applicable contingency.
5. Closing: If the sale completes, your earnest money is credited to your closing funds.

First-time buyer checklist

• Confirm the amount and deposit deadline in your signed contract.
• Calendar all contingency deadlines and set reminders.
• Keep your deposit receipt and all escrow communications.
• Verify wiring instructions by phone using a known number.
• Ask about how deposit size and timing affect your offer strength.

Smart strategies in competitive offers

• Consider a deposit in the 1% to 3% range or a stronger flat amount within your comfort level.
• Shorten your deposit timing if you can fund quickly and safely.
• Keep key protections that matter most to you, and use clear timelines.
• Provide clean, recent proof of funds for the deposit.
• Avoid labeling the deposit nonrefundable unless you understand the risk.

Work with a local advisor

Your earnest money touches almost every part of the deal, from how strong your offer looks to how protected you are if plans change. A local, hands-on advisor can help you set the right amount, manage deadlines, and communicate with escrow so nothing is missed. If you are planning a purchase in Issaquah or across the Eastside, let’s talk about a strategy that fits your goals and budget.

Ready to get started? Connect with Abby Quinto to map out your next steps.

FAQs

What is earnest money in Washington real estate?

• It is a good-faith deposit you pay after offer acceptance that is credited to your down payment and closing costs at closing, unless forfeited per the contract.

How much earnest money is typical in Issaquah?

• Many buyers offer a flat amount in the low to mid thousands or about 1% to 3% of the purchase price on higher-priced homes, depending on competition.

Is earnest money refundable if my financing falls through?

• If your contract includes a financing contingency and you cancel within the deadline after good-faith efforts, it is typically refundable.

Who holds earnest money in King County transactions?

• An escrow or title company named in your Purchase and Sale Agreement usually holds the funds in a trust account until closing or a valid cancellation.

How fast do I need to deposit earnest money in Washington?

• Your contract controls, but a common timeline is 1 to 3 business days after mutual acceptance, so confirm your exact deadline.

Can the seller keep my earnest money if I back out?

• If you default after removing contingencies or miss deadlines, the seller may claim the deposit as liquidated damages if allowed by the contract.

How do I avoid wire fraud when sending earnest money?

• Call the escrow or title company using a verified phone number to confirm wiring instructions and never rely on email alone.