Ready to write an offer on a Claremont home but not sure how much earnest money to put down? In a competitive LA County market, your deposit can help your offer stand out, yet it also carries risk if you move too fast. Here’s a clear guide to how earnest money works in California, typical deposit sizes in Claremont, when funds are refundable, and how to protect yourself while staying competitive. Let’s dive in.
Earnest money basics in California
Earnest money is a good-faith deposit that shows a seller you are serious. In California, it is typically held by the escrow or title company and credited toward your purchase price at closing. The California Association of Realtors Residential Purchase Agreement sets the amount and timing of the deposit, plus contingencies and deadlines that govern when funds are refundable. Always follow the executed contract for the exact amount, timing, and delivery method.
Typical deposits in Claremont
Claremont is a desirable LA County suburb near major job centers and the Claremont Colleges, so multiple offers are common in many price ranges. In lower competition settings, buyers often offer about 1 percent of the purchase price or a flat amount such as $3,000 to $10,000. In competitive segments, deposits of 1.5 to 3 percent are common, and some buyers offer more to signal strength. Balance size with risk, because larger deposits increase exposure if you remove contingencies and later cancel.
Examples to help you plan:
- $600,000 purchase: 1 percent is $6,000, 2 percent is $12,000.
- $900,000 purchase: 1 percent is $9,000, 2 percent is $18,000.
- $1,500,000 purchase: 1 percent is $15,000, 2 percent is $30,000.
Refundable periods and contingencies
Your earnest money is generally refundable while you are within your contingency periods and you cancel properly per the contract. Common timelines in local practice include inspection in about 7 to 17 days and loan in about 17 to 21 days, with appraisal usually tied to the loan contingency. If you cancel within these timelines using the required written notices, you can usually recover your deposit. Missing deadlines or failing to follow the cancellation process can jeopardize your refund rights.
When your deposit is at risk
Your deposit can become nonrefundable if you remove contingencies in writing and then fail to close. It can also be at risk if contingency deadlines pass without cancellation and you later default. Some contracts include a liquidated damages clause or a nonrefundable deposit provision, which can allow the seller to keep the deposit if you breach. If a dispute arises, escrow typically needs mutual written instructions or a court order to release funds, and money may be held until the dispute is resolved.
Delivery, deadlines, and wire safety
Most California offers require delivery of earnest money within a short window after acceptance, often 1 to 3 business days, though this is negotiable. Escrow companies accept wires, cashier’s checks, or certified funds. Verify the exact deadline and delivery method in your executed contract, and get a receipt from escrow when funds are received. For wire transfers, always call your escrow or title company using a trusted phone number to confirm instructions, and never rely only on email to avoid wire-fraud scams.
Strategies by buyer type
First-time buyers
- Aim for a solid pre-approval and a reasonable deposit, often around 1 percent, to show seriousness without overexposing yourself.
- Keep standard contingencies for inspection, loan, and appraisal, and consider shorter but realistic periods like 10 to 14 days for inspection and 17 to 21 days for loan.
- Strengthen your offer with flexibility on closing timelines or other non-monetary terms rather than waiving protections.
- Avoid waiving contingencies or making the deposit nonrefundable unless you fully accept the risk.
Move-up buyers
- Consider a larger deposit, such as 2 percent or more, if it aligns with your risk tolerance and strengthens your position.
- If you need to sell a current home first, structure that contingency and timing carefully to avoid deadline conflicts.
- When appropriate, negotiate a staged approach, such as an initial deposit followed by an additional deposit upon removal of certain contingencies. Make sure all terms are written into the contract.
All-cash or strong-cash buyers
- Pair a clear proof-of-funds letter with a reasonable deposit. Financing certainty often matters as much as deposit size.
- You can choose a larger deposit to underscore confidence, but you rarely need to risk nonrefundable funds to win if other terms are strong.
Keep your offer strong and safe
- Track every deadline. Put inspection, appraisal, and loan dates on your calendar so you can act before timelines expire.
- Use written notices. Submit any contingency removals, extensions, or cancellations in writing per the contract.
- Confirm escrow details. Verify the escrow company, double-check wiring instructions by phone, and obtain a receipt for your deposit.
- Document everything. Save pre-approval letters, proof of funds, inspection reports, and all escrow communications.
- Think before you waive. Removing contingencies or agreeing to nonrefundable terms can help you compete, but it also increases risk. Discuss the tradeoffs with your agent, and consult an attorney if needed.
Quick offer checklist
- Decide on a deposit size that matches your risk tolerance and market conditions.
- Attach a strong lender pre-approval or proof of funds to your offer.
- Set realistic but competitive contingency timelines and put them in your calendar.
- Confirm the escrow company and the deposit delivery method before you wire or deliver funds.
- Plan for extensions early if needed, and request them in writing before deadlines.
A thoughtful earnest money strategy can help you win in Claremont without losing sleep. By aligning your deposit size with the market, holding onto critical protections, and following the contract to the letter, you can move from offer to closing with confidence. If you want a local, boutique guide who knows the Inland Empire foothill market and will walk you through each step, reach out to Shannon Brady for one-on-one support.
FAQs
How much earnest money should I offer on a $900,000 Claremont home?
- Typical deposits range from 1 to 2 percent, or about $9,000 to $18,000, with some buyers offering more in very competitive situations.
When can a seller keep my earnest money in California?
- If you breach the contract after removing contingencies or miss deadlines and default, the seller may be entitled to the deposit per the contract, including any liquidated damages clause.
Is a nonrefundable deposit a smart way to win in Claremont?
- It can make an offer stand out, but it removes key protections and raises risk, so only consider it if you fully understand the exposure and have discussed it with your agent and attorney.
What happens to my deposit if the appraisal is low?
- If you have an appraisal contingency, you can usually cancel within the timeline and recover your deposit; without that contingency, you may need to cover the shortfall or risk default.
Is earnest money the same as my down payment?
- No, it is credited toward your down payment and closing costs at closing, which reduces the amount you must bring to finish the purchase.
