You found a home you love in Denver and you’re ready to write an offer. Then your agent mentions “earnest money.” What is it, how much do you need, and when could you get it back? These are smart questions to ask before you sign.
In this guide, you’ll learn how earnest money works in Denver, typical amounts, how deadlines protect your deposit, and when your money could be at risk. You’ll also get a simple checklist you can use from offer to closing. Let’s dive in.
What earnest money is
Earnest money is a good‑faith deposit that shows a seller you are serious. It is credited toward your purchase price at closing unless the contract says otherwise. The amount, who holds it, and when it is refundable are controlled by your signed purchase contract and escrow instructions.
In Denver, the deposit is usually held by a title or escrow company in a trust account. Sometimes a brokerage trust account is used. The funds stay there until closing or until there is a written agreement or order telling the holder how to release them.
Typical amounts in Denver
There is no fixed rule for how much to put down. The amount depends on price, market conditions, and how competitive your offer needs to be. Here are common ranges you will see in Denver:
- In a balanced market, about 1% of the purchase price or a flat amount such as $2,000 to $10,000.
- In a competitive market, 1% to 3% or more is common. In multiple‑offer situations, some buyers offer 2% to 5% or large flat sums to stand out.
- For lower‑priced homes, fixed amounts like $1,000 to $5,000 are sometimes used.
Examples: On a $400,000 home, 1% is $4,000 and 2% is $8,000. On a $700,000 home, 1% is $7,000 and 2% is $14,000. A larger deposit can strengthen your offer, but it also increases your exposure if you miss a deadline or breach the contract.
When and where you deposit
Your contract will specify who holds the funds and how to deliver them. In Denver, buyers commonly wire the funds or deliver a cashier’s check to the named title or escrow company. Your agent will include the deposit instructions with your executed contract.
Be ready to move quickly. Buyers often have 24 to 72 hours after contract acceptance to deliver earnest money, depending on what is written in the contract. Timely delivery matters. If you miss this deadline, you could be in default under the contract.
Key contingencies that protect your deposit
Colorado residential contracts include important objection and termination rights. If you follow the notice rules and deadlines in your contract, your earnest money is typically refundable under these protections.
Inspection period
You can inspect the property and either object or terminate within the inspection timeline. In Denver, inspection objection deadlines are often about 7 to 10 days, but the contract controls. If you properly terminate within this period, your earnest money is generally refundable.
Financing and appraisal
The financing contingency protects you if your loan is not approved. Loan objection deadlines are commonly 7 to 21 days, often following the inspection period. Appraisal provisions are usually tied to financing. If the appraisal comes in low, you may be able to terminate or renegotiate within the appraisal period. If you waive these protections or miss the deadline, your deposit could be at risk.
Title review
You will receive a title commitment and have time to review and object. If title issues are not resolved and you follow the contract’s notice rules, you can often terminate and receive a refund of your earnest money.
When your earnest money is at risk
Earnest money can be at risk if you miss a deadline, fail to provide required written notices, or breach the contract. Waiving inspection or financing protections increases your exposure. If your contract includes a liquidated damages option and you default, the seller may seek to keep your deposit as their remedy, depending on what the contract allows.
The key is procedural. Even if a contingency exists, you must send the proper written notice on time and in the correct way defined by the contract. Keep proof of delivery.
How refunds and disputes work
Title and escrow companies hold your funds in trust and release them only based on written mutual instructions, a court order, or a binding arbitration decision. If the two sides disagree, the money can be tied up while you resolve the dispute.
Common paths to resolution include mutual agreement, mediation or arbitration if required by the contract, or a court process such as an interpleader. If a dispute arises, work with your agent right away and consider speaking with a licensed Colorado attorney about your options.
Smart steps to protect your deposit
Use this checklist from offer to closing:
- Before signing: Confirm the deposit amount, the delivery deadline, and who will hold the funds.
- Delivering funds: Use a traceable method like a wire or cashier’s check and get a written receipt from the holder.
- Calendar deadlines: Track inspection, financing, appraisal, and title objection dates. Set reminders.
- Follow notice rules: If you need to object or terminate, do it in writing before the deadline and in the format your contract requires.
- Be careful with waivers: Understand the risks before waiving inspection or financing protections. Consider alternatives like negotiated repair language or appraisal gap strategies if appropriate for your situation.
- Keep records: Save your contract, deposit receipt, inspection reports, lender communications, and any notices you send.
How much should you put down?
A common starting point in a neutral Denver market is 1% of the purchase price. Increase the amount if the market is competitive and your agent believes it will strengthen your offer. Balance that with your risk tolerance and the protections you have in the contract.
If you are risk‑averse, be cautious about waiving contingencies or shortening timelines unless you are comfortable with the exposure. Your agent can help tailor the amount and terms to your goals and the current market.
Closing day: where the money goes
If the deal closes, your earnest money is credited on the closing statement toward your down payment, closing costs, or the purchase price. You will see it as a credit in your final figures.
Work with a local guide
Smart earnest money strategy can help you win the home and protect your deposit. You deserve advice that matches Denver’s market and the specifics of your offer. If you want a clear plan for amount, timelines, and contingencies, let’s talk.
Reach out to Rachel Russell to set up a free, no‑pressure consultation and get a step‑by‑step strategy for your next offer.
FAQs
In Denver, how much earnest money do I need?
- There is no fixed law; in a typical market 1% of the price is common, and in competitive situations many buyers offer 2% to 3% or more.
Will I lose earnest money if the appraisal comes in low?
- Not if your contract protects you and you terminate or renegotiate within the appraisal timeline; if you waived protections or miss the deadline, your deposit may be at risk.
Who holds earnest money in Denver purchases?
- Usually a title or escrow company named in the contract; sometimes a brokerage trust account holds it per the contract instructions.
Who decides whether I get my earnest money back?
- The contract controls; if you properly terminate under a contingency, the escrow holder typically refunds it, and disputes require mutual agreement or an order.
Can the seller keep my earnest money if they cancel the sale?
- If the seller breaches the contract, you generally can seek remedies and usually recover your deposit; consult your agent and, if needed, a Colorado attorney.
