You spot the right place on Capitol Hill and get ready to write an offer. Then your agent asks, “What are you comfortable putting up for earnest money?” If that question raises your blood pressure, you are not alone. Earnest money feels high stakes because it is. In Seattle, it signals serious intent and can make or break your offer.
This guide explains how earnest money works in Capitol Hill and across King County, what is typical for amounts and timing, how contingencies protect you, what happens if a deal fails, and practical strategies to keep your funds safe while staying competitive. Let’s dive in.
What earnest money is
Earnest money is a deposit you pay after an offer is accepted to show good faith. It is credited to your down payment and closing costs at closing. The amount, timing, and refund rules are all set by your purchase and sale agreement and the escrow instructions.
In Seattle, contracts commonly use NWMLS or Washington REALTORS forms. These standard forms include fields for the deposit amount, deadlines, where funds are held, and what happens if either party cancels or defaults.
Who holds the deposit
In most Seattle transactions, escrow or a title company holds your deposit in a trust account. A brokerage trust account is also possible, but less common. Escrow will not release funds without written instructions signed by both buyer and seller, or an order from a court or arbitrator, per the contract.
Deposit timeline in Seattle
Local practice typically calls for a quick first deposit after mutual acceptance, often within 1 to 3 business days. Some buyers use a two-step schedule, where a smaller initial deposit is followed by a second deposit when major contingencies are removed. Your exact dates and amounts are set in the contract, and on-time delivery is essential.
Earnest money amounts
There is no single rule for amounts. Nationwide “rules of thumb” often cite 1 to 3 percent of the price. On Capitol Hill, deposits range from a few thousand dollars on less competitive listings to much larger sums in bidding wars. In tight markets, buyers sometimes offer 5 percent or more to strengthen the offer.
Your best guide is the property’s price tier and current competition. A deposit should demonstrate seriousness without exposing you to unnecessary risk before contingencies clear.
Safe ways to pay
Common methods include wire transfer, cashier’s or certified check, and sometimes a personal check. If the contract requires prompt availability, use certified funds or a wire.
Wire fraud is a real risk. Always confirm wiring instructions directly with the escrow company using a known phone number or in person. Do not rely only on emailed wiring details. Keep written confirmation of delivery from escrow.
Buyer contingencies
Contingencies are your main protection. They set conditions that must be met before you proceed, and they outline when your deposit is refundable.
Inspection contingency
You can cancel within the inspection period and receive a full refund if you send timely written notice. Shortening this period can help your offer, but give yourself enough time to inspect thoroughly.
Financing contingency
If you cannot secure financing as described in the contract and you cancel before removing the contingency, your deposit is generally refundable. Solid pre-approval can help you shorten this window safely.
Appraisal contingency
If the appraisal comes in below the purchase price, you may cancel or renegotiate per your contract. Deposit handling depends on the terms and your actions.
Title contingency
If title issues arise that the seller cannot cure, you may cancel and recover your deposit per the contract language.
Sale-of-home contingency
Less common in competitive markets, this clause allows you to cancel and recover the deposit if your current home does not sell within the agreed timeframe.
If a deal fails
If you cancel within a valid contingency period and follow the notice rules in your contract, your earnest money is typically refunded. If you cancel after removing protections, or otherwise breach the agreement, the seller may be entitled to keep the deposit as liquidated damages if the contract includes that clause.
If the seller fails to perform, you generally recover your deposit and may have additional remedies, subject to the contract. In practice, many situations end with a mutual release, where both parties sign written instructions for escrow. If there is a dispute, escrow will hold funds until there is a written release, a court order, or an arbitration outcome.
Buyer deposit strategies
These common approaches balance offer strength with protection. Your contract wording controls, so align these choices with your goals and risk tolerance.
- Staged deposit. Make a smaller initial deposit after acceptance, then a larger deposit when you remove key contingencies. This shows commitment while keeping most funds protected until you are confident.
- Clear contingency terms. Use precise deadlines and explicit refund triggers for inspection, financing, appraisal, and title issues. Follow notice rules in writing, on time.
- Shorter timelines with care. You can shorten inspection or financing windows to compete, but only if you can complete your due diligence in time. Consider pre-inspections and full lender pre-approval.
- Pair with escalation. If you use an escalation clause, choose an earnest money amount that signals strength without overexposing funds before contingencies are cleared.
- Leverage negotiations. Tie seller credits or repairs to inspection results so you stay on track and reduce the chance of a breakdown that risks your deposit.
- Verify escrow instructions. Confirm the escrow company, deposit location, and wire details directly, and keep written acknowledgments of delivery.
Capitol Hill checklist
Use this quick checklist to stay organized from offer through closing.
- Pre-offer:
- Get written mortgage pre-approval and line up proof of funds for the deposit.
- Discuss typical deposit ranges for comparable Capitol Hill homes or condos with your agent.
- At offer:
- Select your deposit amount and whether you want a two-step schedule.
- Confirm the escrow company and verify wiring instructions by phone or in person.
- Set realistic inspection, financing, and appraisal deadlines in your contract.
- After acceptance:
- Deliver the initial deposit by the deadline and keep escrow’s receipt.
- Track each contingency date and send timely written notices for removal or cancellation.
- Keep documentation from your inspector, lender, and the seller.
- If issues arise:
- Exercise any contingency cancellation in writing before the deadline.
- If the seller claims the deposit, ask for a written explanation and consult your agent. Consider legal counsel for disputes.
Scenarios and outcomes
- Cancel during inspection on time, in writing. Your deposit is refunded.
- Remove financing contingency, then cannot close. The seller may keep the deposit as damages if the contract allows.
- Seller cannot deliver marketable title. You can cancel and typically recover your deposit.
- Both parties agree to cancel. You sign a mutual release and escrow distributes funds as agreed.
Next steps
A smart earnest money plan does two things. It boosts your credibility in a competitive Capitol Hill market, and it keeps your funds as safe as possible until you are ready to commit. With clear terms, on-time execution, and strong communication, you reduce stress and avoid avoidable risks.
If you want a calm, data-driven approach to your offer strategy and deposit terms, connect with Brad Hinckley. You will get neighborhood-specific guidance, precise timelines, and hands-on management from offer through closing.
FAQs
How does earnest money work in Seattle?
- It is a good-faith deposit applied to your closing costs, held by escrow or title under the contract. Refund and forfeiture rules are defined in your purchase agreement.
Who holds earnest money in Capitol Hill sales?
- Escrow or a title company typically holds funds in a trust account and releases them only with mutual written instructions or a legal order.
What is a typical earnest money amount?
- There is no fixed amount. Many buyers offer several thousand dollars, sometimes 1 to 3 percent of price. In competitive situations, deposits can be 5 percent or more.
When is the deposit due after acceptance?
- Commonly within 1 to 3 business days, with the possibility of a second deposit when you remove contingencies. Your contract sets the exact dates.
How do contingencies protect my deposit?
- If you cancel within a valid inspection, financing, appraisal, or title contingency and follow notice rules, your deposit is typically refundable.
Can a seller keep my deposit if financing falls through?
- If you have a financing contingency and cancel before removing it, you are generally entitled to a refund. Without that protection, the seller may keep the deposit per the contract.
Is wiring earnest money safe?
- Wiring is common and fast, but confirm instructions directly with escrow on a verified phone number to avoid wire fraud, and keep proof of delivery.
