Earnest Money In Washington Explained

Putting thousands of dollars down before you even get the keys can feel risky. If you are buying in Bellevue or greater King County, earnest money is a key piece of your offer and your leverage. You want to be competitive without putting your funds at unnecessary risk. This guide explains how earnest money works in Washington, what is typical on the Eastside, and how to protect yourself from avoidable mistakes. Let’s dive in.

Earnest money basics

Earnest money is your up-front deposit that shows good faith to proceed with a purchase. It is credited toward your purchase price at closing or otherwise distributed according to your contract. The Purchase and Sale Agreement sets the amount, where the money is held, delivery deadlines, contingency timelines, and remedies if either party defaults.

A neutral title or escrow company usually holds your deposit in a trust account. Sometimes a real estate broker trust account may hold funds temporarily. Pay close attention to the clauses that name who holds the money, when it is due, any liquidated damages language, and the specific timelines for contingencies and closing.

Typical deposit in Bellevue

Local practice varies by property and competition, but common Eastside ranges are:

• About 1% to 3% of the purchase price in ordinary transactions.
• 3% to 5% in highly competitive offers or as a stronger market signal.

For a $1,000,000 home, that means $10,000 at 1%, $20,000 at 2%, and $30,000 at 3%. Larger deposits can strengthen your offer, but they also increase your exposure if you waive protections or miss deadlines.

How you deliver funds

Common methods are a wire transfer to escrow or a cashier’s check made out to the escrow or title company. Personal checks are less common and may need to clear before counting as delivered. Always confirm the exact wiring instructions directly with the escrow company before sending funds to avoid fraud.

Deadlines and contingencies

When payment is due

In many Washington contracts, earnest money is due upon mutual acceptance or within a short window after acceptance, often 1 to 3 business days. Your contract controls the exact deadline. Make sure you understand whether deadlines run on calendar or business days.

Common contingency windows

• Inspection: often 3 to 10 days to complete inspections and decide whether to proceed, negotiate, or terminate.
• Financing: often 10 to 21 days, depending on lender and loan type.
• Appraisal: typically tied to the financing window.
• Closing timeline: many Eastside closings land around 30 to 45 days from acceptance, though some are shorter or longer.

Removing contingencies and your risk

Once you remove a contingency in writing, or if you miss the deadline to terminate under that contingency, your right to a refund tied to that protection usually ends. If you later default without an applicable contingency, you may risk forfeiting your earnest money, depending on your contract’s remedies language.

Refunds, forfeiture, and liquidated damages

When you can get a refund

You can usually receive a refund if you terminate in writing within a valid contingency window, such as inspection or financing, and you follow the notice procedures in your contract. If the seller cannot perform due to a material issue, you may also be entitled to a refund or other remedies.

When you may forfeit your deposit

If you breach the contract after contingencies have been removed or expire, the seller may claim the earnest money as liquidated damages if your agreement includes that remedy. If you decide not to proceed without a valid contingency or proper notice, the seller can seek contract remedies; outcomes depend on the facts and the contract.

How liquidated damages works

Many Washington purchase agreements include a liquidated damages clause. If both parties agree to it, the earnest money is often the seller’s sole remedy if the buyer defaults, assuming the clause is enforceable. Disputes can arise and sometimes end up in court.

Escrow handling and disputes

Escrow disburses funds only according to the contract or written instructions signed by both parties. If the buyer and seller disagree on who should receive the money, escrow often holds the funds until it receives a mutual release or a court order. In some cases, escrow may file an interpleader so the court can decide.

Refund timing varies. Once escrow has the required releases, it processes the return. If you paid by check, escrow may also wait for funds to fully clear before refunding.

Step-by-step: Making a smart deposit

Before you write an offer

• Align your deposit strategy with market competitiveness and your comfort level.
• Keep funds ready in a liquid, traceable form for a wire or cashier’s check.
• Verify the escrow company’s identity and wiring instructions by calling a number you find independently.

What to confirm in your contract

• Exact deposit amount and delivery deadline.
• Named escrow or title company and how to deliver funds.
• Contingency lengths for inspection, financing, and appraisal.
• Remedies language, including any liquidated damages clause.
• Notice procedures for termination and any required forms.

After mutual acceptance

• Deliver the deposit on time and get written confirmation of receipt.
• Track your contingency and notice deadlines on a shared calendar.
• Order inspections promptly and coordinate with your lender on appraisal timing.

Tips for first-time and relocating buyers

If you are relocating, allow for time zone differences and bank processing. Plan wires so funds arrive within the deadline, and account for 1 to 2 business days for transfers to clear.

If you are a first-time buyer with limited cash, you can stay competitive with strong pre-approval and thoughtful terms while keeping a reasonable deposit. Keep necessary protections in place and know your cutoff for risk.

If you plan a larger deposit than is typical, ask your agent and escrow company about holding practices and documentation. For unusual situations or large financial exposure, consider speaking with a real estate attorney.

Protect your funds from fraud

Wire fraud is real. Confirm wiring instructions with escrow through a verified phone number, never from an email link. Send a small test wire if needed, and verify receipt. If something looks off, pause and call the escrow company before you send money.

Talk with a local advisor

Your earnest money strategy should match your goals, risk comfort, and the realities of each Bellevue listing. If you want help tuning your deposit amount, contingency timelines, and delivery plan, connect with a local guide who treats the process like hospitality. Let’s make it smooth, clear, and competitive from the first conversation.

Ready to map out a winning offer? Reach out to Michael Nix to review your timeline and build a deposit strategy that protects your position.

FAQs

What is earnest money in Washington real estate?

• It is a buyer’s up-front deposit that shows good faith, held in escrow and credited toward the purchase price at closing per your contract.

How much earnest money is typical in Bellevue?

• Many offers land around 1% to 3% of the purchase price, with 3% to 5% common in competitive situations, depending on the listing and market.

When is earnest money due after offer acceptance in WA?

• Often upon mutual acceptance or within 1 to 3 business days, exactly as stated in your Purchase and Sale Agreement.

When can a buyer get their earnest money back in WA?

• If you terminate in writing within a valid contingency window or if the seller cannot perform, escrow can return funds once it receives proper releases.

What does liquidated damages mean for earnest money in WA?

• If agreed in the contract, the seller may keep the earnest money as the sole remedy if the buyer defaults, subject to enforceability and the case facts.

Who holds the earnest money in a Bellevue home purchase?

• A neutral title or escrow company usually holds the deposit in a trust account, as named in the contract; a broker trust account may hold funds temporarily.

How long does escrow take to deposit or refund earnest money?

• Escrow often deposits or clears funds within 1 to 3 business days; refunds process after required releases and any clearing timelines are met.

Should I raise my earnest money to win a multiple-offer in Bellevue?

• A larger deposit can strengthen your offer, but it increases risk if protections are waived; balance competitiveness with your comfort with potential loss.