Earnest money usually needs to be deposited within one to three business days after the seller accepts your offer and the purchase agreement becomes effective. The contract itself sets the exact deadline, and it controls: if your agreement says 24 hours, that’s your deadline, and if it says three business days from the effective date, weekends and federal holidays don’t count against you.
How the Deadline Is Set
The clock starts on the contract’s effective date, which is generally the moment the last party signs and communicates acceptance to the other side. From there, the deposit clause specifies how long you have. One to three business days is the common range in residential deals, but some contracts measure the window in calendar days instead, which shortens things noticeably when a weekend falls in the middle.
Read the deposit clause before you sign, not after. A few details change the math:
- Business days versus calendar days. Sign on a Friday under a “three business days” clause and your deadline may not arrive until the following Wednesday. The same clause written in calendar days would fall on Monday.
- When the clock starts. Some contracts begin the count on verbal acceptance; others require delivery of the fully signed document. If signatures happen over several days, that distinction matters.
- Silent contracts. If your agreement doesn’t state a deadline, state law or local real estate board rules may fill the gap, often with a fallback around three business days. That’s a safety net, not a substitute for clear contract language, so ask your agent to confirm the exact deadline in writing.
What Happens If You Miss It
Missing the deposit deadline is a serious problem, not a paperwork slip. Most purchase agreements include a “time is of the essence” clause, which makes deadlines strict and enforceable. Even a one-day delay can be treated as a breach.
When you miss the window, the seller typically has the right to send a notice to perform. That notice gives you a short cure period, often two to five days depending on the contract, to deliver the deposit before the agreement is formally terminated. If you don’t cure inside that window, the seller can cancel the contract and move on to another buyer with no further obligation to you. Some contracts skip the cure step entirely and make the agreement voidable the moment the deadline passes, giving the seller the choice to enforce the deal or walk away. Either way, the practical outcome is that you can lose the house over a timing failure alone.
Where to Send the Deposit
Earnest money is almost always held by a neutral third party rather than the seller. In most transactions, that’s a title company, an escrow agent, or a real estate attorney, all of whom place the funds in a dedicated trust or escrow account. In some deals, the listing brokerage holds the deposit in its own regulated escrow account instead.
Your purchase agreement should name the specific party responsible for holding the funds. Before you send anything, confirm the correct entity name, account number, and file reference directly with the escrow holder. Sending money to the wrong account can delay the transaction or expose you to outright fraud. Never hand earnest money to the seller.
Accepted Payment Methods
Wire transfers are the most common way to send earnest money, especially for larger amounts. Your escrow officer or title company will provide routing and account details, and your bank will issue a reference number once the transfer goes through so you can confirm the funds arrived. Cashier’s checks and certified checks are also widely accepted and can be delivered in person to the escrow holder’s office.
Personal checks are rarely accepted because they take several days to clear, and the escrow holder needs verified funds quickly. Whatever method you use, get a written receipt or signed acknowledgment from the party holding the deposit. That receipt is your proof of performance if a dispute later arises about whether you met the deadline.
Watch for Wire Fraud
Real estate wire fraud is common enough that it needs to shape how you send the deposit. The FBI’s Internet Crime Complaint Center recorded 9,359 real estate fraud complaints in 2024, and business email compromise schemes, the primary method used to redirect earnest money wires, accounted for roughly $2.77 billion in total losses across all industries that year.1FBI Internet Crime Complaint Center. 2024 IC3 Annual Report Criminals hack or spoof an email from your agent, title company, or lender, then send fake wiring instructions that route your deposit to a fraudulent account.
Verify all wiring instructions by calling the escrow holder at a number you already have on file, not one from the email containing the instructions. Treat any last-minute change to wire details as suspicious until you’ve confirmed it by voice. After you send the wire, call the same known number to confirm receipt.
How Much You’ll Be Depositing
Deposit amounts generally run from 1% to 10% of the purchase price, with 1% to 3% being most common in balanced markets. The exact number is negotiable and driven by local conditions:
- In buyer-friendly markets, deposits often land around 1% to 2% of the purchase price, and sellers are less likely to push for more.
- In competitive or seller-friendly markets, buyers frequently offer 3% to 5%, sometimes higher, to stand out among multiple bids.
- In high-cost metro areas, 3% or more is common because it signals stronger commitment on a larger purchase.
No federal law caps how much a seller can request. Any limits come from state or local rules, so check the norms in your area before making an offer. Offering more than the minimum can strengthen your position, but only deposit what you can afford to have tied up in escrow for weeks or months.
What Happens to the Money After You Deposit It
If the sale closes, your earnest money isn’t a separate expense. It’s applied toward your down payment or closing costs, and the purchase agreement specifies how it gets credited. Put down $10,000 in earnest money against a $50,000 down payment, and you bring $40,000 to closing for that portion. The escrow holder moves the deposit directly into the closing funds so you aren’t paying twice.
If you back out without a valid contingency, the picture is different. The seller is typically entitled to keep the deposit as compensation. Many contracts include a liquidated damages clause that designates the deposit as the seller’s exclusive remedy, meaning the seller keeps the money but can’t sue for more. Other contracts allow the seller to either keep the deposit or pursue actual damages, which could exceed the deposit if the seller suffers real losses from the failed deal. Which remedy applies depends on your contract, and the difference can be substantial, so read the default and remedies sections before you sign.