Wondering how much earnest money you need to compete in Marin County? You are not alone. With high prices and quick-moving listings, it can be hard to know what signals real commitment without taking on too much risk. In this guide, you will learn typical deposit amounts in Marin, when your money is refundable, how to avoid wire fraud, and smart strategies to strengthen your offer while protecting your interests. Let’s dive in.
Earnest money basics in California
Earnest money is a good-faith deposit you pay when your offer is accepted. It shows the seller you are serious and is applied to your purchase price at closing.
In California, the Residential Purchase Agreement spells out your deposit amount, when it is due, how it is held, and what happens if either party defaults. Neutral third-party escrow or title companies typically hold the funds and follow written instructions from both parties.
Many agreements include a liquidated damages option. If both parties select it, the seller’s remedy for a buyer default is usually limited to keeping the deposit, subject to the contract. If it is not selected, other remedies may be available under the contract. Your agent will walk you through that decision before you sign.
Typical Marin deposit amounts
There is no single rule, but some ranges are common. In California, buyers often start around 1% to 3% of the purchase price. In Marin’s competitive, higher-price market, deposits of 2% to 5% are frequently seen on strong offers. For higher-end homes, buyers sometimes make flat-dollar deposits in the $25,000 to $100,000+ range.
A quick example helps: on a $1,200,000 purchase, a 2% deposit is $24,000, 3% is $36,000, and 5% is $60,000. Cash buyers or buyers in bidding wars may lean higher to signal strength. If market conditions are calmer, first-time buyers or those with financing needs may keep deposits closer to the lower end of the range.
Timing and how deposits are paid
Your purchase agreement sets the delivery timeline. In practice, buyers often deliver the initial deposit within 1 to 3 business days after acceptance. Some sellers ask for an additional deposit a few days later so the total equals the agreed percentage.
Escrow companies accept cashier’s checks, personal checks that clear into escrow, or wire transfers. Wires move quickly but carry fraud risk, so be sure to verify instructions directly with the escrow company by phone using a trusted number. Ask escrow for a written receipt once your funds are credited.
Contingencies and when deposits are refundable
Contingencies protect you while you complete due diligence. Common ones include inspection, loan, appraisal, title review, HOA or condo document review, and natural hazard disclosures. These timelines are set in your contract.
Generally, if you cancel in writing within an active contingency period according to the contract, your deposit should be refundable. If you remove contingencies, or let the deadlines expire while staying in contract, and then later default, you may risk forfeiting the deposit or face other remedies depending on the contract language.
If a dispute arises over who is entitled to the deposit, escrow typically holds the funds until both sides provide joint written instructions or there is a legal resolution. Keep written notices and follow the contract’s procedures to protect your position.
How funds are held and protected
Escrow or title companies, acting as neutral third parties, hold earnest money per written instructions. In some cases, a broker may temporarily place funds in a regulated trust account before transferring them to escrow.
Ask escrow to confirm in writing that your funds have been received and credited. Keep your deposit confirmations and account details in your transaction file.
Wire fraud prevention tips
Real estate transactions are targets for wire fraud. A few simple steps reduce risk:
- Verify wiring instructions by calling the escrow company at a known phone number. Do not rely on numbers or links in email.
- Confirm the account name and routing details match the escrow holder listed in your contract.
- Consider a cashier’s check if escrow allows and your timeline permits.
- Request written confirmation from escrow once funds are received and credited.
Offer strategies that use the deposit
Your deposit and contingency choices work together to shape your offer’s strength and your risk. The best strategy depends on the property, competition level, and your financing.
Competitive strategy for hot listings
- Increase the deposit size. A larger percentage or a strong flat amount shows commitment.
- Use staged deposits. Offer a smaller initial deposit with a larger second deposit due shortly after acceptance to balance signaling and liquidity.
- Shorten contingency periods. For example, a 7 to 10 day inspection window can help in multiple-offer situations. Be sure your inspector and lender can meet the timeline.
- Provide strong underwriting. Share updated pre-approval and proof of funds. Tailor your appraisal contingency with clear terms if values are tight.
- Coordinate with your lender. Confirm appraisal turn times and underwriting bandwidth before shortening loan timelines.
Protective strategy when you need flexibility
- Keep the deposit closer to the 1% to 3% range if market conditions allow.
- Align any additional deposit with a key milestone, such as after you remove the inspection contingency.
- Retain standard contingencies until you complete inspections and receive loan approval.
- Move quickly on due diligence so you can make timely, informed decisions without jeopardizing refund rights.
A simple deposit checklist
- Review the deposit amount, schedule, and deadlines in your signed contract.
- Verify escrow holder details match your contract before sending funds.
- Confirm wiring instructions by phone using a trusted number. Avoid email-only verification.
- Deliver the initial deposit within the agreed timeframe, often 1 to 3 business days.
- Obtain a written receipt from escrow and confirm funds have cleared.
- Track contingency deadlines and document any extensions in writing.
- Send any additional deposit on time, especially if tied to contingency removal.
- Keep copies of all notices, receipts, and contingency removals in one place.
Tradeoffs and real-world examples
Imagine a well-priced single-family home draws multiple offers in its first week. To stand out, you might offer a 3% deposit with a second deposit due after your 10-day inspection period, shorten your inspection timeline, and include a current lender pre-approval. This combination signals commitment while preserving a window for due diligence.
Now consider a property that has been on the market longer. You might use a 1% to 2% deposit, keep standard contingency timelines, and schedule inspections promptly. If your findings are clean and your lender advances quickly, you can remove contingencies with confidence and proceed to closing.
Work with a local advisor you trust
Your deposit is one of the clearest signals you send a seller, but it also carries risk if the market shifts or issues arise. The right guidance helps you strike the balance between a compelling offer and prudent protection. If you are planning a purchase in Marin, especially in higher-end neighborhoods and golf-course communities, partner with a local expert who can tailor your deposit, timelines, and contingencies to current conditions.
Ready to discuss your strategy and next steps? Request your complimentary Marin market consultation with Amadeo Arnal.
FAQs
How much earnest money should I plan for in Marin?
- Many buyers start around 1% to 3% of the purchase price, while competitive Marin offers often use 2% to 5% or a strong flat-dollar amount for higher-end homes.
When is my earnest money refundable in California?
- It is generally refundable if you cancel in writing within an active contingency period per your contract; refundability is limited after contingencies are removed or expire.
What is a liquidated damages clause and why does it matter?
- If selected by both parties, it usually limits the seller’s remedy for buyer default to keeping the deposit; if not selected, other remedies may be available under the contract.
Who holds the deposit and how is it protected?
- A neutral escrow or title company typically holds funds in compliance with written instructions; request a written receipt and confirmation of funds credited to escrow.
How do I avoid wire fraud when sending my deposit?
- Verify wiring instructions by phone using a known number for the escrow company, avoid email-only confirmations, and request written confirmation once funds are received.
Can the seller keep my deposit if I walk away after removing contingencies?
- If you default after removing contingencies, the seller may be entitled to keep the deposit under the contract’s remedies; consult your agent before removing protections.
