You finally found a home you love in St. Mary’s County, but now the seller is asking for earnest money. How much should you put down, where does it go, and how do you keep it safe? You are not alone if this part feels confusing at first.
In this guide, you will learn what earnest money is, how it works in Maryland, typical deposit ranges, and the smart steps to protect your funds. You will also see common scenarios and what usually happens in each one so you can plan with confidence. Let’s dive in.
What earnest money is
Earnest money, sometimes called an earnest money deposit or EMD, is a good-faith deposit you submit with your offer. It shows the seller you intend to follow through with the purchase. If the deal closes, your EMD is credited toward your purchase price, down payment, or allowed closing costs.
Sellers value earnest money because it signals your commitment and provides limited protection if a buyer breaches the contract. Your purchase contract will spell out how much you are offering, when you must deliver it, who is holding it, and how it is applied at closing.
Why sellers care in St. Mary’s
Local conditions shape seller expectations. St. Mary’s County can see shifting demand tied to inventory levels and relocations connected to NAS Patuxent River. In tighter markets, sellers may prefer higher EMDs. In slower markets, you may be able to offer less or negotiate other terms.
How Maryland contracts handle your deposit
In Maryland, your EMD is controlled by the purchase contract. Many buyers and sellers use the Maryland REALTORS Residential Contract of Sale or another written contract. The agreement sets the amount, delivery deadline, escrow holder, refund rules, and remedies.
Who holds the funds
In most Maryland transactions, a title company or settlement agent holds the EMD in a dedicated escrow account. Sometimes a listing broker will hold it in a licensed trust account, or an attorney may hold funds when counsel is involved. You should receive written confirmation or a receipt that shows who is holding the money and the exact amount.
When you pay and why timing matters
Contracts usually require delivery by a specific deadline, such as within a certain number of days after ratification. Many contracts include time-is-of-the-essence language, which means missing the deadline can affect your rights. Deliver on time and get a written receipt so your contract stays on track.
When you get it back
Refundability depends on contingencies and whether you meet all notice requirements in the contract. If a contingency is not met and you provide proper notice within the allowed time, your EMD is typically refundable. If you waive contingencies or miss notice deadlines, you increase the risk that the seller may claim the deposit as damages, depending on the contract’s remedy language.
How much to offer in St. Mary’s
Many U.S. markets see typical earnest money in the range of 1 to 3 percent of the purchase price. The right number for your offer in St. Mary’s County depends on current competition, days on market in your price range, and your overall strategy. Your agent can help you gauge what is common in your target neighborhoods.
If you are in a competitive situation, you can consider a larger deposit to strengthen your offer. If market conditions are slower, you might offer closer to the lower end of the typical range or improve other terms instead.
Tips for right-sizing your EMD
- Match market conditions. Ask your agent for real-time insight on local activity and recent winning offers.
- Coordinate with your lender. If you use FHA or VA financing, confirm timing and documentation so funds move smoothly.
- Balance risk and appeal. A higher EMD can help, but only commit what you can safely risk under the contract you are signing.
Protect your deposit with contingencies
Contingencies give you the right to cancel under certain conditions and receive your EMD back if you follow the contract’s notice rules.
Inspection contingency
If inspections reveal issues you are not willing to accept, you can usually cancel within the inspection period by giving written notice as the contract requires. Do not let the deadline pass. If you need more time to evaluate contractors or quotes, request an extension in writing before the period ends.
Financing and appraisal contingencies
If your loan is denied and you properly terminate within the financing contingency, your deposit is typically refundable. If the appraisal comes in below the contract price, the appraisal clause may allow you to renegotiate or cancel and recover your EMD if you act within the stated timeline. Buyers using VA or FHA loans should pay close attention to program rules and timing because lender requirements and appraisal outcomes can affect your rights.
Title and seller performance
If the seller cannot deliver marketable title or otherwise breaches the agreement, you may be entitled to an EMD refund and other remedies, as the contract provides. Your agent can help you follow the notice steps in the agreement if this happens.
Wire funds safely
Wire fraud that targets real estate closings is a real risk. Before you send any money:
- Call the title company or settlement agent at a verified phone number to confirm wiring instructions.
- Be cautious with email. Do not rely on emailed instructions without live confirmation.
- Ask your bank to verify account details before releasing funds.
- Get a receipt and keep copies of all confirmations.
Step-by-step: delivering EMD in St. Mary’s
- Confirm the exact amount and due date in your signed contract.
- Verify the escrow holder’s name, address, and contact information in writing.
- Ask about acceptable payment methods, such as wire, cashier’s check, or ACH, and confirm delivery instructions by phone.
- Deliver funds by the deadline and obtain a written receipt.
- Save copies of the receipt, check images, and any bank confirmations.
- Track all contingency periods and submit any notices as the contract requires.
Common scenarios and typical outcomes
- Inspection finds major defects and you cancel within the inspection period. If you give proper notice in time, the EMD is normally refunded.
- Financing falls through and you cancel under your financing contingency. With timely notice and any required lender documentation, the EMD is typically refundable.
- Appraisal is low and you cancel under an appraisal clause. If you follow the contract’s steps and deadlines, the EMD is usually refunded.
- You waive contingencies and later cannot close. This increases the risk that the seller may keep the EMD as damages, based on the contract’s remedy language.
- Seller cannot deliver marketable title or breaches the agreement. You may be entitled to an EMD refund and other remedies per the contract.
If a dispute arises
Start by reviewing the signed contract. It explains each side’s remedies, the escrow holder’s responsibilities, and any dispute resolution steps such as mediation or arbitration. Contact the escrow holder or title company to request their instructions for disputed funds. If you cannot reach a resolution, you can seek legal guidance consistent with the contract’s provisions.
Quick checklist you can save
- Confirm EMD amount and due date in the contract.
- Identify the escrow holder and get contact details in writing.
- Deliver funds on time and get a receipt.
- Keep copies of all payment confirmations.
- Track contingency deadlines and send notices exactly as the contract requires.
- Confirm your EMD credit appears on the closing statement at settlement.
Local tips for St. Mary’s buyers
- Ask your agent which title companies commonly handle escrow in St. Mary’s County and how they verify wires.
- If you are relocating due to military orders for NAS Patuxent River, discuss timing windows and seller expectations that often come with military moves.
- If a broker is holding your funds, confirm they are licensed to maintain trust accounts and will issue a receipt promptly.
Ready to move forward with confidence?
A clear plan for your earnest money helps your offer stand out and keeps your purchase on track. If you want local guidance on the right deposit amount, how to structure contingencies, and how to protect your funds from offer to closing, we are here to help. Connect with Unknown Company for buyer-first advice and a smooth path to your new home.
FAQs
What is earnest money in a Maryland home purchase?
- Earnest money is a good-faith deposit you submit with your offer that is credited to you at closing and governed by the terms of your purchase contract.
How much earnest money is typical in St. Mary’s County?
- Many markets see 1 to 3 percent of the purchase price. Your exact amount should reflect current local demand and your offer strategy.
Who holds my earnest money in St. Mary’s?
- A title company or settlement agent usually holds it in an escrow account. Sometimes a licensed broker or an attorney will hold funds.
When can I get my earnest money back?
- If a contingency is not met and you give the required notice within the deadline, the EMD is typically refundable under the contract.
What happens if I miss a deadline?
- Missing delivery or contingency notice deadlines can affect refund rights. Time-sensitive clauses in the contract make timing very important.
How do I avoid wire fraud when sending my deposit?
- Always confirm wiring instructions by phone using a verified number, never rely on email alone, and get a receipt after the funds are sent.
