How Much Earnest Money Do You Need to Buy a Home in Pullman or Moscow, and Is It Refundable?

Earnest money is a good-faith deposit you submit with an accepted offer. On the Palouse it is commonly a low single-digit percentage of the purchase price, but the exact amount is negotiable and written into your offer. A neutral party holds it, and it is credited toward your down payment and closing costs at closing. It is generally refundable if you cancel for a reason your contract allows, such as a financing or inspection contingency, and generally forfeited if you back out for a reason the contract does not protect.

The context on the Palouse

The Consumer Financial Protection Bureau describes earnest money as a deposit a buyer pays to show good faith on a signed contract to buy a home, held by a seller or a third party such as a real estate agent or title company. In a balanced or slower local market a smaller deposit is often accepted. When a home draws multiple offers, buyers sometimes raise the deposit to make an offer stand out. The dollar figure is not set by law; it is part of what you and the seller agree to in the purchase and sale agreement.

Practical steps

1. Ask your agent what deposit amounts recent accepted offers in that price range and area have used.
2. Decide on an amount you can wire to the closing or escrow company within the deadline your contract sets.
3. Confirm in writing who holds the deposit and get a receipt.
4. Keep your contingency dates in view, since missing a deadline can put the deposit at risk.
5. At closing, verify the deposit is credited on your settlement statement toward your costs.

Common mistakes

• Treating earnest money as an extra fee rather than a credit that comes back to you at closing.
• Missing the deposit delivery deadline written into the contract.
• Waiving inspection or financing contingencies without understanding how that changes whether the deposit is refundable.
• Assuming a verbal agreement protects the deposit; only the written contract terms do.

Related questions

• When is earnest money due after an offer is accepted on the Palouse?
• Is earnest money refundable if my mortgage falls through?
• How is earnest money different from a down payment?

A note on scope

This article is general information, not legal, tax, lending, insurance, inspection, or title advice. For those questions, work with the relevant licensed professional.

Next step

Talk through a deposit amount that fits your budget and the current local market before you write an offer. You can also contact Jordan.

About the author

Jordan Vorderbrueggen writes about buying and selling homes in Pullman, Moscow, and across the Palouse with Woodbridge Real Estate. Hard to Spell, Tough to Beat.