What it is
Earnest money is a deposit paid by the buyer after the contract is signed and held in escrow, usually by a title company, attorney or the listing broker's escrow account. At closing it is credited toward the purchase price or closing costs.
It is not an extra fee. If the sale closes, it is part of your money; if the contract ends under its terms, the contract decides who receives it.
How much is typical
Deposits vary with price, market and negotiation, and are commonly a percentage of the price. New construction often requires larger deposits in stages. A stronger deposit can make an offer more attractive, but it also raises what is at risk.
Choose an amount you are comfortable with, and understand exactly when it becomes non-refundable.
When it is due
The contract states the number of days after the effective date by which the deposit must be delivered. Missing the deadline can allow the seller to treat the contract as in default, so confirm the instructions with the escrow agent right away.
Wire fraud is common in real estate. Always verify wiring instructions by phone using a number you already know, never from an email alone.
When you get it back
Typically the deposit is refundable if you cancel properly within the contract's inspection period, if you cannot obtain financing under a financing contingency, or if the seller defaults. The contract language and deadlines control.
Keep written notice of any cancellation and follow the contract's notice method exactly.
When you can lose it
A buyer who defaults after deadlines pass, for example by failing to close without a valid contingency, may forfeit the deposit as agreed damages under the contract. Disputes can require a formal release or a court process.
This is why dates in the contract matter: inspection, financing, appraisal and closing.
Cash purchases and foreign buyers
Cash buyers often put down a larger deposit to compete. Foreign buyers should plan how to send funds in time, because international wires can take days and the title company may ask for source-of-funds documents.
Confirm transfer details with your bank in advance and keep records.
Common mistakes
Missing the due date, sending funds on unverified instructions, assuming the deposit is always refundable, ignoring the contingency deadlines and not keeping proof of payment.
Another mistake is not asking who holds the funds and what their insurance and procedures are.
Checklist
Read the deposit clause and note the delivery date. Confirm who the escrow agent is and call them on a known number to verify wiring details. Pay on time and keep the receipt. Put the inspection, financing and closing deadlines in your calendar. Send written notice before a deadline if you plan to cancel.
A simple timeline
Day 0 the contract is signed. In the first days the deposit is delivered. During the inspection period you can still cancel under the contract. After that, the deposit is increasingly at risk, so decide on repairs and financing in time and ask your agent to confirm every date with you before it arrives.
Next step
Before you make an offer, we will explain each deadline so you know when the deposit is protected. Lidiya Tretyak is a licensed Florida real estate agent with Douglas Elliman and speaks English, Russian and Ukrainian; the first consultation is free.
This guide is general information, not legal or tax advice. Laws and programs change — confirm details with a Florida attorney and a US tax professional.
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