Ever wonder what really happens to your earnest money once a seller says yes to your offer in Tacoma? You are not alone. Earnest money can feel confusing, yet it plays a big role in winning the home you love and protecting your interests. In this guide, you will learn what earnest money is, how much buyers in Tacoma and Pierce County typically put down, how it is held, and when it is refundable versus forfeited. Let’s dive in.
What Earnest Money Is
Earnest money is a good faith deposit you provide after your offer is accepted. It shows the seller you are serious about closing. It is not a fee. If the sale closes, the deposit is typically credited toward your cash to close, which may include your down payment and closing costs.
Your purchase and sale agreement controls the rules for your deposit. The contract sets when you must deposit the funds, who will hold them, and under what conditions they get released to you or to the seller. If anything is unclear, escrow will follow the written instructions and the dispute steps in the contract.
Typical Amounts in Tacoma
In Tacoma and Pierce County, buyers commonly structure earnest money as either a flat dollar amount or a percentage of the purchase price. A conservative starting point often falls in the low thousands, roughly $2,500 to $10,000. In more competitive situations or at higher price points, buyers may offer 1 to 3 percent.
A few quick examples help: on a $450,000 home, 1 percent equals $4,500. On a $700,000 home, 2 percent equals $14,000. Your ideal amount depends on price, how competitive the listing is, your financing strength, and whether you plan to shorten or waive contingencies.
How Deposits Work
Most buyers in Washington deliver the deposit to a neutral escrow or title company named in the contract. Less commonly, funds are held in a broker trust account if the agreement calls for it. Escrow holds the money according to the contract and releases it only with the required instructions or legal resolution.
The deadline to deposit is set in your signed agreement. Many local offers call for delivery within 1 to 3 business days after mutual acceptance, but your contract controls the exact timeline. Always get a receipt from escrow and keep it with your records.
If there is a dispute, escrow follows the contract. If the parties do not agree, escrow may continue to hold funds until it receives joint written instructions or a mediation, arbitration, or court order.
When It Is Refundable
Your earnest money is typically refundable when you follow the contract and exercise a contingency on time. Common protective contingencies include:
- Inspection contingencies for general or specialized inspections
- Financing contingencies if you cannot secure your loan within the set timeframe
- Appraisal contingencies if valuation comes in low and no resolution is reached
- Title contingencies if title defects are not resolved
- Sale-of-home contingencies if your purchase depends on selling your current home
Your money is also typically refundable if the seller clearly fails to perform the contract or if both parties sign a mutual termination. Contingency timing is critical. You must deliver the required notices within the stated windows to preserve your refund rights.
When It Can Be Forfeited
You may forfeit your earnest money if you default after passing or waiving your contingencies. If you fail to close or miss key deadlines without a contractual excuse, the seller can be entitled to the deposit as liquidated damages if your contract includes that clause.
If your agreement does not include liquidated damages, the seller could pursue other remedies. The exact remedies depend on the contract language. To reduce risk, track every deadline and do not remove protections unless you fully understand the trade-offs.
Strategy for Tacoma Buyers
A stronger earnest money offer can help you stand out. A larger amount, quick deposit, and clean instructions show readiness to perform. Paired with a strong pre-approval and proof of funds, this can give sellers more confidence even if you keep standard contingencies.
Balance is key. A higher deposit increases your exposure if you later default, and shortening or waiving contingencies adds risk. Many first-time and relocating buyers choose a moderate path: a reasonable deposit amount, standard inspection and financing contingencies, and realistic timelines.
If competition is intense, you might take a more aggressive approach: increase your deposit, tighten inspection timelines, and present clear proof of funds. Always coordinate closely with your agent and lender so you understand the risks and the steps to protect your deposit.
Timeline at a Glance
- Offer accepted: Deposit earnest money within the timeframe in your contract, often 1 to 3 business days.
- Inspection period: Commonly negotiated at about 7 to 10 days. Use this time to complete agreed inspections and deliver any required notices.
- Loan and appraisal: Often 21 to 30 days depending on your loan and closing date. Monitor lender conditions and appraisal timing.
- Contingency removals: Provide written removals by the deadlines. After removal, your deposit is at higher risk if you default.
Buyer Checklist
- Decide on an amount that fits the market and your comfort level.
- Confirm who will hold the funds and how you will deliver them.
- Mark every contract deadline in your calendar and share them with your agent and lender.
- Plan your inspections early and know exactly how to send notices.
- Keep proof of deposit and all escrow receipts.
- Confirm wiring instructions directly with the escrow company by phone before sending funds.
Work With a Local Guide
Earnest money norms vary by neighborhood, price band, and how competitive the listing is. A local expert can help you right-size your deposit, structure contingencies that protect you, and present a clean offer that sellers trust.
You deserve a clear plan and quick communication from offer to closing. If you are buying in Tacoma or Pierce County, our team pairs neighborhood insight with step-by-step transaction support so you can move forward with confidence. Ready to talk next steps? Connect with The Network to schedule a free consultation.
FAQs
Who holds my earnest money in Tacoma?
- Usually a neutral escrow or title company named in your purchase agreement, or less commonly a broker trust account if the contract specifies that.
When is earnest money due in Washington purchases?
- Your signed contract sets the deadline, and many local offers call for delivery within 1 to 3 business days after mutual acceptance.
Does earnest money apply to my down payment at closing?
- Yes, it is typically credited toward your cash to close, which may include your down payment and closing costs.
Can I get my earnest money back after a failed inspection in Tacoma?
- If you exercise the inspection contingency on time and as the contract requires, the deposit is typically refundable.
What if a seller accepts another offer after mine is signed?
- That is generally a seller breach, and you can notify escrow and request the return of your earnest money per the contract.
How do I avoid wire fraud when sending earnest money in Pierce County?
- Call the escrow company using a verified phone number to confirm wiring instructions and never rely on email instructions alone.
