Putting money down before you even own the home can feel risky. If you are planning a move to Washington, Utah, you want to know how earnest money works, how much to offer, and how to protect it. In this guide, you will learn the basics, typical amounts and timelines, the contingencies that safeguard your deposit, and how local market conditions in Washington County affect your strategy. Let’s dive in.
Earnest money basics in Utah
Earnest money is a good‑faith cash deposit you submit with your offer to buy a home. It shows the seller you are serious and, if the sale closes, it is credited toward your down payment or closing costs.
It is not a fee. The treatment of your deposit is governed by the signed purchase contract. In Utah, buyers and sellers often use standardized forms from the state association. For general background, see the resources from Utah REALTORS.
Your contract sets deadlines, who holds the funds, and default remedies. Read those terms closely with your agent so you understand when your deposit is protected and when it may be at risk.
Typical amounts and timelines
How much should you offer? In many markets, buyers put 1 to 3 percent of the purchase price as a starting point. On lower‑priced homes, you might see a few hundred dollars up to around $3,000. Market competitiveness can push deposits higher. For a national overview of ranges, review this guidance from Bankrate on earnest money deposits.
Common timing in Utah transactions often looks like this:
- Delivery of earnest money: usually within a few business days after acceptance, as stated in the contract.
- Inspection period: commonly 7 to 14 days, unless you negotiate a different window.
- Appraisal: often scheduled within 7 to 21 days and typically falls within the loan timeline.
- Financing contingency: usually 21 to 45 days, depending on your lender and loan type.
Most Utah purchase contracts include a “time is of the essence” clause. That means you must meet deadlines to preserve your rights, including the right to a refund of your deposit if you terminate under a valid contingency.
Buyer protections and contingencies
Contingencies are contract clauses that let you cancel and receive a refund of your earnest money if certain conditions are not met within set timeframes. The National Association of REALTORS offers consumer guidance on contingencies and contract steps. For general resources, visit the National Association of REALTORS.
Here are the most common contingencies in Washington County:
- Inspection contingency. You can inspect the home and negotiate repairs. If you terminate properly within the inspection period, your deposit is typically refundable. In our desert climate, inspections often focus on roof wear, HVAC performance, and pest concerns.
- Financing contingency. If your lender denies your loan and you terminate within the terms, your earnest money is usually returned.
- Appraisal contingency. If the appraisal is low and you and the seller cannot bridge the gap, you can usually cancel and receive a refund.
- Title review. You can object to liens, easements, or defects discovered in the title report. Unresolved issues can justify termination with a refund.
- HOA document review. For homes in an association, you can review financials and rules. Material concerns can allow you to cancel and refund your deposit.
- Well, septic, and water rights. For rural or non‑municipal properties, include testing and permit checks. Washington County health and permitting requirements may apply. For county resources, start with Washington County, Utah.
- Sale of current home. If you must sell your home first, you can include that contingency. Understand it may reduce a seller’s willingness to accept your offer.
Follow your contract instructions exactly. Missing a deadline or failing to provide notice the right way can forfeit your right to a refund.
How funds are held safely
Your earnest money is typically held in an escrow or title company trust account, or sometimes a broker trust account, named in the contract. These accounts are regulated in Utah. For oversight information, see the Utah Division of Real Estate.
At closing, the escrow holder applies your deposit to your down payment or closing costs. If you properly cancel under a valid contingency, the escrow holder refunds your money according to the contract and any written instructions.
Always keep documentation. Save your deposit receipt, wire confirmation, or check image, plus any correspondence showing you met delivery deadlines.
Defaults, disputes, and remedies
If a buyer defaults after removing contingencies, the contract may let the seller keep the earnest money as liquidated damages. Some contracts specify this as the seller’s sole remedy, while others allow additional remedies. If the seller breaches, you can typically demand the return of your deposit and may have other options under the contract.
When a dispute arises, escrow companies usually require matching written instructions from both parties or a court order to release funds. Your next steps are simple: review the contract, notify escrow in writing, consult your agent, and follow any dispute resolution procedures in the agreement.
Local strategies for Washington buyers
Washington County has seen periods of high demand and low inventory. Sellers may weigh deposit size and speed of contingencies when choosing between similar offers. Your strategy should match both the property and your risk comfort.
Consider these approaches:
- Conservative protection. Offer a modest deposit, such as a few hundred dollars to around 1 percent, and keep full inspection, appraisal, and financing contingencies.
- Competitive edge. Increase your deposit toward 1 to 3 percent and shorten the inspection window to 7 days if you are comfortable with the risk. Coordinate with your lender so financing timelines are realistic.
- Strong cash position. Cash buyers often use larger deposits and tighter timelines to stand out. Only take this path if you fully understand the exposure.
- Split deposits. You can propose a smaller initial deposit with a second deposit due on a set date. Spell out dates and amounts clearly in the contract.
Property type matters. Rural parcels that rely on wells or septic systems often call for more protective contingencies and realistic timelines for testing and permits. For HOA communities, budget time to read CC&Rs and financials before you remove contingencies.
Quick readiness checklist
Use this checklist to get deposit‑ready before you write offers:
- Confirm your available liquid funds for earnest money and closing costs.
- Decide a deposit range that fits your budget and risk tolerance.
- Pre‑underwrite or at least pre‑qualify with your lender and confirm loan timelines.
- Choose a target inspection window and identify inspectors you can schedule quickly.
- Ask your agent who will hold the deposit and how delivery will occur. Get a receipt.
- Set calendar reminders for every contingency deadline and delivery date.
When the time comes to submit, the exact dollar amount, deadlines, and who holds the funds will be set in your signed contract. Those terms control your protections and your deposit risk.
Ready to tailor a deposit strategy to your price point, property type, and the current Washington market? Connect with Michelle Evans to review your goals and craft an offer that balances protection with seller appeal.
FAQs
How does earnest money work in Utah home purchases?
- It is a good‑faith deposit submitted with your offer and held in escrow, then credited to your closing funds if you complete the purchase.
How much earnest money do Washington, Utah buyers offer?
- Many buyers use 1 to 3 percent of the price. On lower‑priced homes, a few hundred dollars to about $3,000 is common, adjusted for market competitiveness.
When is earnest money due after my offer is accepted?
- Most contracts require delivery within a few business days of acceptance, and your exact deadline will be written into the agreement.
Which contingencies protect my deposit in Washington County?
- Common ones include inspection, financing, appraisal, title review, HOA documents, and for rural properties, well, septic, and water rights checks.
Who holds the earnest money and is it regulated?
- A title or escrow company, or sometimes a broker trust account, holds the funds. These accounts are regulated by the Utah Division of Real Estate.
Can I get my earnest money back after a bad inspection?
- Yes, if you terminate properly within the inspection deadline and follow the contract’s notice requirements.
What happens to my deposit if I cannot get a mortgage?
- If you have a financing contingency and terminate on time, your deposit is usually refunded. If you waive the contingency or miss deadlines, you may lose it.
What if the seller backs out of the sale?
- If the seller breaches the contract, you can typically recover your earnest money and may have additional remedies under the agreement.
