Buying a home in Washington and wondering how earnest money works? You are not alone. This small deposit plays a big role in your offer and your risk if things go wrong. In this guide, you will learn what earnest money is, how Washington contracts handle it, when it is refundable, and how to approach it in Moses Lake and across Grant County. Let’s dive in.
Earnest money basics
Earnest money is a good-faith deposit you include with a purchase and sale agreement. It shows the seller you are serious and ready to perform. If the deal closes, your deposit is credited toward your down payment and closing costs.
The amount is negotiable. In many markets, buyers offer roughly 0.5% to 3% of the price. Your strategy will depend on price point, competition, and how strong you want your offer to look.
In Washington, you can usually deposit earnest money by personal check, cashier’s check, wire transfer, or approved electronic payment to the escrow or title company named in the contract. Always get a written receipt from the escrow holder.
How Washington contracts handle it
Washington purchase and sale agreements include specific earnest money terms. Your contract states the deposit amount, who will hold it, when it is due, and what happens if either party defaults or cancels.
Most residential deals use a standard form with contingency timelines and remedies. Read your signed contract closely. The exact language controls what happens next.
Typical amounts and forms
- Typical range: about 0.5% to 3% of the price, based on competition and price point.
- Format: personal check, cashier’s check, wire, or approved electronic transfer.
- Proof: request a deposit confirmation from escrow and keep it with your records.
Who holds your deposit
Earnest money is usually held by the escrow or title company listed in the agreement. In some cases it may be held in the listing broker’s trust account, if the contract says so. The holder must follow the contract and applicable rules.
Deposit and key timelines
- Deposit deadline: often due within a short window after mutual acceptance, such as 1 to 5 business days. Your contract sets the exact date.
- Inspection period: commonly 5 to 10 days, depending on what you negotiate.
- Financing and appraisal timelines: these often run 21 to 30 or more days, aligned with the lender’s process.
- Title review: your contract outlines how long you have to review and object to title.
If you remove a contingency by the deadline, you usually give up the right to cancel for that issue later. If you cannot satisfy a contingency and you follow the termination steps on time, you can usually get a refund of your deposit.
Refunds, forfeiture, and disputes
The contract governs when the seller may keep earnest money and when you should receive it back. The details matter, including dates, notices, and documentation.
When you get it back
- You cancel within an active contingency window and send proper written notice.
- A contingency is not met by its deadline, and you terminate correctly under the contract.
- You and the seller sign a mutual written release directing escrow to refund your deposit.
When the seller may keep it
- You miss deadlines or default without a valid contingency to protect you.
- You waive a contingency, then try to cancel for that reason later.
- The contract’s seller remedies clause allows the seller to accept earnest money as liquidated damages. Exact remedies depend on the form you signed.
How disputes are resolved
- Mutual release: the fastest solution, where both parties authorize escrow to release funds.
- Interpleader: if you and the seller cannot agree, escrow may deposit the money with the court and step out, and a judge decides.
- Contract procedures: your agreement may require mediation, arbitration, or other steps before litigation.
Keep all records. Save notices, inspection reports, lender denial letters, and escrow receipts. These items support your claim if a dispute arises.
Moses Lake strategies that work
Local conditions in Moses Lake and Grant County change over time. Price points tend to be lower than larger metro areas, and competition varies by property type and season. Your earnest money plan should match the listing and your comfort with risk.
Conservative market approach
- Offer a reasonable deposit, such as around 1% in many markets.
- Keep key contingencies in place, like inspection and financing.
- Use full contingency windows so you have time to investigate and get loan approval.
Competitive offer moves
- Consider a larger deposit or a quicker deposit timeline to stand out.
- Tighten contingency windows only if you are confident you can perform.
- Understand the risk. Larger deposits and fewer contingencies increase exposure if the deal fails.
Practical steps to protect funds
- Confirm escrow or title: name the licensed escrow or title company in the contract and verify deposit instructions with that company directly.
- Prevent wire fraud: call the escrow company at a known phone number to verify wiring instructions before sending funds, then confirm in writing.
- Get immediate proof: ask for a written deposit receipt or confirmation.
- Track every date: put all contingency deadlines and notice requirements on a calendar.
- Lean on your agent: a local pro can help calibrate deposit size and timelines for Moses Lake listings.
Real-life examples in Grant County
Example A: Inspection contingency exercised
You deliver the deposit to escrow within 3 business days. During a 10-day inspection, a major foundation issue comes up. You send timely written notice to terminate under the inspection contingency. Escrow refunds your earnest money under the contract.
Example B: Financing deadline missed
You do not obtain loan approval by the financing deadline and do not properly terminate. The seller claims default and seeks the earnest money as liquidated damages. The outcome depends on the seller’s remedies clause and whether the seller chooses to accept the deposit as the remedy.
Example C: Competitive offer strategy
You offer a larger deposit and a short delivery window to beat multiple offers. The seller accepts. You must have funds ready and a realistic contingency schedule. If you default later, the larger deposit increases your exposure.
Key timelines to watch
- Deposit delivery: send funds to the named holder by the exact date in your contract.
- Inspection: decide and deliver written notice before the deadline.
- Financing and appraisal: coordinate closely with your lender to meet dates.
- Title review: read the title documents and raise objections within the allowed window.
Missing any of these steps can affect whether your deposit is refundable.
How the money applies at closing
If the sale closes, escrow credits your earnest money toward your required funds at closing. You will see it on your closing statements. If the deal cancels, escrow follows the contract and any signed releases to disburse the funds.
What to confirm with your agent
- The exact deposit amount and how it fits your budget and risk tolerance.
- Who will hold the funds and how you will deliver them.
- All contingency dates, notice rules, and how to document decisions.
- The seller’s remedies clause and what it means if you default.
If you have complex questions about enforcement or unusual contract terms, talk with your real estate attorney and your agent.
Work with a local guide
Earnest money helps your offer stand out, but it also carries risk if timelines slip. With clear planning, proper notice, and the right strategy for Moses Lake, you can stay protected and competitive. If you want a straightforward plan for deposit size, contingency timing, and escrow steps, reach out to a local pro who knows Grant County contracts and timelines.
Ready to move forward with confidence? Connect with Medie Ruiz for local guidance and a practical plan for your earnest money.
FAQs
How much earnest money should a Moses Lake buyer offer?
- It depends on competition and price. Many buyers use about 0.5% to 3% of the price, then adjust up or down based on how competitive the listing is and their risk tolerance.
When do I get my earnest money back if I cancel under contract?
- If you cancel within an active contingency period and follow the contract’s notice steps, the deposit is generally refundable, and documentation like inspection reports or lender denial may be required.
Can a seller keep my earnest money if my lender denies the loan?
- If you kept a financing contingency and give timely notice with any required lender documentation, the deposit should be refundable; if you waived it or missed the deadline, the seller may be entitled to the funds.
Who should hold and receive my earnest money deposit in Washington?
- Deliver funds to the escrow or title company named in the agreement, or to the broker’s trust account if the contract specifies that, and always get a written receipt.
What happens to earnest money at closing in Washington?
- Escrow credits the deposit toward your down payment and closing costs, and it appears on your closing statements.
How can I reduce the risk of losing my earnest money?
- Track every deadline, send timely written notices, keep documentation, verify wire instructions with escrow directly, and work closely with your agent on contingency strategy.
