Are you worried about putting down money on a Denver home and not getting it back? You’re not alone. Earnest money can feel confusing, especially in fast-moving neighborhoods where every detail counts. By the end of this guide, you’ll understand what earnest money is, how much is typical in Denver, how contingencies protect it, and exactly when it is refundable. Let’s dive in.
What earnest money is
Earnest money is an upfront deposit you include with your offer to show the seller you’re serious. It’s sometimes called an earnest money deposit or a good-faith deposit. The funds are held in escrow while you and the seller work through contract deadlines and contingencies.
If the sale closes, your earnest money is credited toward what you owe at closing. That usually means it reduces your cash due for your down payment or closing costs. It does not disappear.
Why it matters in Denver
In Denver’s competitive pockets, a clear and appropriate earnest money deposit can make your offer stand out. Sellers gain confidence when they see you are committed. You still want to protect yourself with the right contingencies and follow every deadline. The goal is to be competitive without taking unnecessary risk.
Typical amounts in Denver
Every offer is different, but these ranges are common in Denver:
- Low-competition or modest offers: often a flat amount such as 1,000 to 2,500 dollars.
- Typical Denver offers: often 2,500 to 5,000 dollars.
- Competitive or higher-priced homes: about 1 to 3 percent of the price, and sometimes higher in very competitive situations.
To put that in context:
- On a 450,000 dollar home, you might see 2,500 to 7,500 dollars.
- On a 650,000 dollar home, you might see 5,000 to 12,000 dollars, or around 1 percent.
- Luxury listings often call for a larger amount in either percentage or flat dollars.
These are examples, not rules. Your agent can help you match the amount to the price point, the neighborhood, and the level of competition.
What influences the amount
- Price point. Higher prices often mean higher deposits in dollar terms.
- Market pressure. Multiple-offer situations tend to push earnest money higher.
- Financing strength. Cash or fully preapproved buyers sometimes offer larger deposits.
- Neighborhood custom. Urban hotspots can differ from outer suburbs.
If you are targeting Cherry Creek or LoHi, norms may differ from areas like Lone Tree, Highlands Ranch, or Castle Pines. Ask your agent to benchmark what is typical right now for your specific search.
How earnest money is handled in Colorado
Who holds the money
Earnest money is usually held by a title or escrow company named in the contract. In some cases, it can be held in the listing broker’s trust account. Title and escrow companies are the most common holders for Denver residential closings.
When you must deliver it
Your purchase contract sets the deadline to deposit the funds after your offer is accepted. It is common to see 24 to 72 hours, but the exact timeline in your contract controls. If you miss the deadline, the seller may have remedies. Always know your deposit due date and confirm delivery.
How you can pay
Accepted methods often include personal check, cashier’s check, wire transfer, or an electronic deposit approved by the escrow holder. If you wire funds, verify instructions with your escrow officer by calling a known phone number. Treat any emailed changes to wiring details with caution. Wire fraud is a real risk, and title companies provide specific guidance to help you avoid it.
What happens at closing
If the deal closes, the earnest money is credited back to you on the settlement statement. It reduces the cash you need to bring to close.
Contingencies and when your money is refundable
Your contract includes contingencies that give you time to verify key parts of the purchase. When you exercise a contingency correctly and on time, you can usually terminate and get your earnest money refunded.
Common buyer contingencies
- Financing approval.
- Inspection period to investigate and negotiate repairs.
- Appraisal result relative to the purchase price.
- Title review and resolution of defects.
- HOA document review when applicable.
- Sale-of-home contingency in some cases.
How refundability works
If you end the contract within a valid contingency period and follow the notice steps in the contract, your earnest money is typically refundable. For example, if an inspection reveals issues you cannot accept and you cancel within the inspection deadline, the escrow holder will usually return your deposit. If you cannot secure financing and you follow the financing contingency process by the deadline, your deposit is also typically refundable.
If you miss a deadline or withdraw for reasons not covered by the contract, the seller may claim your earnest money. In some contracts, the seller’s remedy may be limited to keeping the deposit as liquidated damages. In others, the seller can pursue broader remedies. Colorado transactions often use forms based on the Colorado Association of REALTORS standard Contract to Buy and Sell Real Estate, but your specific contract controls the outcome.
If there is a dispute
Escrow holders do not release earnest money without proper authorization. If buyer and seller disagree, the title company will hold the funds until there is a signed mutual release or a legally binding directive. The contract describes how disputes are resolved, including mediation, arbitration, or court interpleader in some cases.
Step-by-step: protect your earnest money
Before you write an offer
- Get preapproved for your mortgage so your financing contingency has a strong foundation.
- Ask your agent about neighborhood norms and what is competitive at your price point.
- Decide how much you are comfortable tying up during the contract period.
When you submit the offer
- Clearly state the earnest money amount and the escrow holder in the contract.
- Confirm the deposit deadline and prepare funds so you can deliver on time.
- Set realistic contingency timelines for inspection, appraisal, financing, title, and HOA review.
- Calendar all deadlines immediately.
After your deposit is made
- Keep proof of deposit, such as a receipt or wire confirmation.
- Confirm the escrow holder acknowledges receipt.
- Complete inspections, loan steps, and appraisal within your deadlines to preserve refund rights.
If you need to terminate
- If a contingency applies, send written notice using the contract’s required forms and methods before the deadline.
- Request release of your earnest money from the escrow holder according to the contract.
- If the seller contests the release, expect the title company to hold funds until both parties sign a release or a binding instruction is issued.
Common pitfalls to avoid
- Missing a deadline. A late notice can cost you refund rights, even if your reason is valid.
- Skipping written notices. Verbal conversations do not replace the contract’s required forms and delivery methods.
- Wiring money without verification. Always call your escrow officer at a known number before sending funds.
- Assuming an as-is listing removes your protections. You can still use an inspection contingency to investigate and decide.
How much should you offer right now?
Start with the property’s price, the number of competing offers, and what is typical in that submarket. In balanced situations, 2,500 to 5,000 dollars is common around Denver. In more competitive settings or higher price tiers, 1 to 3 percent is more typical. Your agent can help you decide whether to use a flat amount or a percentage and how to structure a strong offer while keeping your protections in place.
Final take: be competitive and careful
Earnest money signals commitment in Denver’s market, from Cherry Creek condos to single-family homes in the Highlands and south to Castle Pines. The amount should fit the home, the neighborhood, and the competition. Protect your deposit by following every deadline, using clear contingency language, and keeping everything in writing. When in doubt, review your contract terms and ask questions early.
If you want a clear, step-by-step plan tailored to your price point and neighborhood, we are here to help you write a strong offer and safeguard your deposit. Connect with Lara Property Group for local guidance that balances competitiveness with protection.
FAQs
What is earnest money in a Denver home purchase?
- It is a good-faith deposit you include with your offer that is held in escrow and credited to you at closing.
How much earnest money should I offer in Denver?
- Typical amounts range from 2,500 to 5,000 dollars or about 1 to 3 percent in more competitive or higher-priced situations.
Who holds my earnest money after my offer is accepted?
- A title or escrow company usually holds the funds, or less commonly the listing broker’s trust account.
How quickly do I need to deliver the deposit in Colorado?
- Your contract sets the deadline, commonly within 24 to 72 hours of acceptance, so confirm the exact time and plan ahead.
When is earnest money refundable in Denver?
- It is typically refundable when you terminate within a valid contingency period and follow the contract’s notice procedures.
What happens to earnest money at closing?
- It is credited toward your cash due at closing, such as your down payment or closing costs.
If my loan, appraisal, or inspection goes wrong, do I get my deposit back?
- Yes, if the related contingency is in your contract and you cancel on time and in writing per the contract.
What if I change my mind after contingencies expire?
- The seller may claim your earnest money and could have additional remedies depending on the contract.
How do I avoid wire fraud when sending earnest money?
- Verify wiring instructions by calling your escrow officer at a known phone number and never rely on unexpected emailed changes.
Who decides how earnest money is released if there is a dispute?
- The escrow holder follows the contract and requires a signed mutual release or a binding directive before releasing funds.
