Earnest Money in Washington: What Buyers Should Know

Have you heard the term “earnest money” and wondered how it actually works when you buy a home in Pierce County? You are not alone. This deposit can strengthen your offer and protect you, but only if you understand the rules and timelines. In this guide, you will learn what earnest money is, typical amounts in our South Sound market, who holds the funds, when it is refundable, and how to keep your deposit safe. Let’s dive in.

Earnest money explained

Earnest money is a good-faith deposit you deliver after a seller accepts your offer. It shows you are serious and gives the seller a financial remedy if you breach the contract. The deposit is usually applied to your purchase price at closing.

It is not the same as your down payment or closing costs, even though it is often credited to them. Washington offers typically rely on inspection, financing, appraisal, and title contingencies rather than an “option fee” model used in some other states. Your Purchase and Sale Agreement sets the rules for how the deposit is handled.

How much to offer in Pierce County

Typical ranges

Typical earnest money in Washington is either a flat dollar amount or a percentage of the price. Common amounts include:

• $1,000 to $5,000 for lower-priced homes or modest offers.
• About 1% to 3% of the purchase price as a general rule in normal markets.
• Higher deposits, such as 2% to 5% or more, in competitive situations to strengthen an offer.

For higher-priced homes, buyers may offer larger flat sums or a higher percentage. The right number depends on price point and market conditions.

Market influences in the South Sound

Across Pierce County communities like Tacoma, Puyallup, Lakewood, and Gig Harbor, deposit norms track how competitive the submarket is. In a multiple-offer situation, sellers often expect stronger deposits. In a slower market, smaller deposits may be acceptable.

A modest deposit can still protect you if contingencies are well written and you meet all deadlines. A very small deposit may weaken your offer in a hot pocket of the market. A very large deposit increases your risk if you miss a deadline. Work with your agent to balance size, contingencies, and timeline.

Who holds and safeguards the funds

Common holders

In Washington, earnest money is usually held by a title or escrow company. Sometimes, the listing or buyer’s brokerage holds the funds in a trust account. Your Purchase and Sale Agreement will name the holder and specify the delivery deadline.

Escrow companies in Washington are regulated, and licensed escrow officers must follow state rules. Real estate brokerages that hold client trust funds must also follow state trust-account requirements. These guardrails are in place to protect your money while the transaction moves forward.

Receipts, tracking, and disputes

Deliver funds exactly as instructed in the contract and obtain written confirmation. Keep the receipt that shows the amount, date received, and who is holding your money.

If there is a disagreement later, the holder will follow the contract. They may require a mutual release from both parties, hold the funds while you resolve the dispute, or interplead the money with the court if needed. Clear paperwork and on-time notices reduce the chance of a dispute.

Contingencies and refunds

Common protections

Contingencies are your main tools to protect your deposit. If you terminate within the allowed window and follow the contract steps, your earnest money is typically refundable. Common buyer protections include:

• Inspection contingency: You may inspect, request repairs, or terminate within the inspection period.
• Financing contingency: If you cannot obtain financing in time and properly terminate, you can recover the deposit.
• Appraisal contingency: If the appraisal comes in low and the contract allows termination, the deposit is refundable when you act on time.
• Title contingency: If title defects are not cured as provided in the contract, you may be able to terminate and receive a refund.

If you default

If you terminate after deadlines or without contractual grounds, the seller may claim the deposit. Many Washington contracts include a liquidated damages clause that allows the seller to keep the earnest money if the buyer defaults, limiting the seller’s remedy to that amount.

If the seller fails to perform, buyers often have termination rights and can usually recover the deposit. When parties do not agree, the dispute can move to mediation, arbitration, or court under the contract’s procedures.

Timelines to expect

Deposit delivery

Most contracts require delivery of earnest money within a short window after mutual acceptance, often 24 to 72 hours or by a date named in the agreement. Plan ahead so you can send funds quickly.

Inspection, appraisal, and financing

Inspection timelines are often 5 to 10 business days. Appraisals are usually ordered early and may take 7 to 14 days, sometimes longer in busy periods. Loan approval and removal of the financing contingency often take 14 to 30 days, depending on your loan type and lender.

Closing window

In Pierce County, many transactions close 30 to 45 days after mutual acceptance. Shorter or longer closings are negotiable. The key is to track every date and deliver required notices on time.

Buyer checklist to protect your deposit

• Get fully preapproved before you write an offer. It makes your offer stronger and keeps financing on schedule.
• Align your deposit strategy with market conditions. Decide the amount and contingencies that fit your risk tolerance and the seller’s expectations.
• Verify the named earnest money holder in the Purchase and Sale Agreement. Confirm delivery instructions before your offer is signed.
• Deliver the funds promptly and get a written receipt. Save confirmations in one place.
• Calendar every deadline. Include inspection, appraisal, loan, and any other contingency dates with reminders.
• Use clear, timely written notices for any termination allowed by the contract. Follow exact wording and delivery methods.
• Guard against wire fraud. Call the escrow or title company using a known phone number to confirm wiring instructions before you send money. Do not rely on email instructions alone.
• If a dispute arises, ask the holder about their process and what documentation they need. Request an itemized accounting if funds are retained.
• For complex terms, such as liquidated damages or dispute procedures, discuss with your agent and consider an attorney review for high-value or complicated transactions.

Local tips for South Sound buyers

• Norms vary by neighborhood and price tier. What works in North End Tacoma may differ from Gig Harbor or Puyallup.
• Multiple offers are still common in select areas and price points. Stronger deposits and tighter timelines can help, but protect yourself with realistic contingency windows.
• Many Pierce County buyers use regional title and escrow companies that serve King, Pierce, and Kitsap counties. Ask your agent for recommendations and contact information early.
• If you are using first-time buyer assistance, coordinate with your lender and program administrator so your timelines align with the contract dates.

Next steps

Your earnest money should strengthen your offer, not keep you up at night. With clear terms, firm deadlines, and a smart deposit strategy, you can compete confidently and protect your funds.

If you want help crafting the right offer strategy for Pierce County, our local team is here to guide you from preapproval through closing. Reach out to Infinity Real Estate to schedule a free consultation.

FAQs

How much earnest money should I offer in Pierce County?

• Typical deposits range from $1,000 to $5,000 or about 1% to 3% of the price. In competitive pockets, buyers sometimes offer 2% to 5% to stand out.

Who usually holds earnest money in Washington?

• Title or escrow companies commonly hold the funds, though some brokerages use trust accounts. Your Purchase and Sale Agreement names the holder and delivery deadline.

Is earnest money refundable after inspection in Washington?

• Yes, if you terminate within the inspection window and follow the contract’s notice rules. After the deadline, terminating without grounds may put your deposit at risk.

Can a seller keep my deposit if they back out?

• If the seller breaches, buyers typically can recover the deposit. If the buyer defaults, the seller may claim the deposit if the contract permits, often under a liquidated damages clause.

Is earnest money refundable if the appraisal is low?

• If your offer includes an appraisal contingency and you act within its timeline, you can usually terminate and receive a refund. Without that contingency, options are limited.

Can earnest money be used toward closing costs?

• Yes. At closing, the deposit is commonly credited to your down payment and closing costs, as reflected on your final settlement statement.