When your offer is accepted, you'll put down earnest money — a deposit that shows the seller you're serious. Whether you keep that money if the deal falls apart comes down to your contingencies: the conditions written into the contract that let you walk away for legitimate reasons. Understanding both is how buyers avoid losing thousands of dollars on a deal that wasn't meant to be.
Source: RESMP editorial guidance; earnest money and contingency norms vary by state and contract.
What earnest money is
Earnest money is a good-faith deposit — commonly around 1–3% of the purchase price, though it varies — that you put down when your offer is accepted. It's held by a neutral third party in escrow, not handed to the seller, and it's later credited toward your down payment or closing costs. A larger deposit can make your offer more competitive; it also means more at stake if you walk away without a valid reason.
What contingencies do
Contingencies are conditions that must be met for the sale to proceed, and they're your safety net. Common ones include the inspection contingency (you can renegotiate or exit if the inspection reveals serious problems), the appraisal contingency (protection if the home appraises below the contract price), and the financing contingency (an exit if your loan falls through). Meet a contingency's terms and back out within its window, and you generally get your earnest money back.
When you can lose the deposit
You're most at risk of losing earnest money if you back out for a reason not covered by a contingency, or after a contingency deadline has passed — essentially, breaching the contract. This is why waiving contingencies to win a competitive bid is a real gamble: it strengthens your offer but removes your safety net. Never waive one without understanding exactly what protection you're giving up.
How a good agent protects you
Structuring the right contingencies — and hitting every deadline they impose — is precisely where a buyer's agent earns their fee. They know which protections matter for your situation, how aggressive your local market expects offers to be, and how to keep you from forfeiting a deposit on a technicality. RESMP matches you with verified local buyer's agents who handle exactly this, with no referral fees to you.
Frequently Asked Questions
How much earnest money do I need?
Commonly around 1–3% of the purchase price, though it varies by market and how competitive your offer needs to be. It's held in escrow and credited toward your down payment or closing costs at closing.
Can I get my earnest money back if the deal falls through?
Usually yes, if you back out for a reason covered by a contingency (inspection, appraisal, or financing) and within its deadline. You risk losing it if you breach the contract or miss a contingency window.
Is it risky to waive contingencies?
Yes. Waiving contingencies makes an offer more competitive but removes your safety net, putting your earnest money — and more — at risk if something goes wrong. Never waive one without fully understanding the trade-off; a good agent can advise.
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April 2026