Making an offer on a home in Maryland City comes with an important step you might not expect: putting down earnest money. This good‑faith deposit helps you show a seller you are serious while you complete inspections, financing, and other steps. When you understand how it works, you can write a stronger offer and protect your money. This guide breaks down the amounts, timelines, protections, and best practices you need to know. Let’s dive in.
Earnest money basics
Earnest money is a deposit you pay at or shortly after the seller accepts your offer. It shows good faith and signals that the seller can take the property off the market while you work through the contract’s contingencies.
If you close, the deposit is applied toward your purchase price or closing costs. If you terminate within allowed contract timelines, you typically get it back. If you breach the contract after protections expire, the seller may be allowed to keep the deposit depending on the contract.
In Maryland, the Residential Contract of Sale and any addenda control how earnest money is handled. Funds are usually held in an escrow or trust account by a title or settlement company, a broker, or a closing attorney. The contract should identify who holds the funds and where they will be deposited.
How much to expect in Anne Arundel County
There is no single right number. Many buyers use about 1% to 3% of the purchase price. In more competitive situations, some buyers offer 3% to 5% or more to stand out. For entry‑level homes, fixed deposits like $1,000 to $5,000 still appear in local practice.
To make it concrete:
- On a $300,000 home, 1% is $3,000 and 2% is $6,000.
- On a $600,000 home, 1% is $6,000 and 2% is $12,000.
Your ideal deposit depends on local competition, seller expectations, and your risk tolerance. In a sellers’ market, a larger deposit can help your offer look stronger. Balance that with the protections you need and the cash you will need for closing.
When you pay and key timelines
Your contract will set the deadline for delivering earnest money. Some contracts say “upon ratification,” and others set a specific number of business days. Common practice is 1 to 3 business days, but the contract controls the exact deadline.
Contingency timelines also live in the contract. Typical local windows include:
- Inspections and due diligence: often 7 to 14 days, depending on what you negotiate.
- Financing: a loan commitment date is often 21 to 30 days, but it varies by lender and contract.
- Appraisal: timelines are also defined by the contract and your lender’s process.
Track these dates carefully. Missing a deadline can put your deposit at risk.
When deposits are refundable vs. at risk
Your earnest money is typically refundable if you terminate within a valid contingency period and provide proper written notice as the contract requires. That includes inspection, financing, title, or other agreed‑upon protections.
Your deposit can be at risk if you waive protections, miss notice deadlines, or decide not to proceed for a reason not covered by your contract. In that case, the seller may be allowed to keep the deposit or pursue other remedies outlined in the contract.
Always document everything. Give written notices on time and keep proof of delivery so your refund rights are clear.
Who holds your deposit
In Maryland City and across Anne Arundel County, escrow funds are commonly held by a title or settlement company or by a licensed broker in a trust account. The contract should name the escrow holder and note how to deliver funds.
Confirm the delivery method before you send money. Many buyers wire funds or provide certified checks. Get a written receipt and verify the funds were deposited into an escrow or trust account.
Protect your funds: safety tips
Earnest money and closing funds are targets for fraud. Use these steps to stay safe:
- Verify wire instructions by phone using a trusted number from your agent or settlement company. Do not trust instructions sent by unexpected email.
- Avoid handing over cash. If you must, get a signed, detailed receipt.
- Confirm the identity of the escrow holder. Work with a reputable title or settlement company, attorney, or licensed broker.
Smart steps for Maryland City buyers
Use this quick checklist to keep your deposit protected and your offer strong:
- Talk with your agent about deposit size before you write the offer. Match your deposit to market conditions and your comfort level.
- Confirm the escrow holder and delivery method in the contract. Know whether you will wire or deliver a check, and to whom.
- Get a receipt and confirm the funds went into an escrow or trust account.
- Track all deadlines for inspections, appraisal, financing, and title review. Put them on your calendar.
- Give all notices in writing and within the contract timelines. Keep copies and proof of delivery.
- If a dispute comes up, contact your agent and the escrow holder right away and follow the contract’s dispute steps. Involve a real estate attorney if needed.
If a dispute arises
Most contracts require both parties to sign an escrow release before funds are disbursed. If you and the seller disagree, the escrow holder usually keeps the funds in the account until there is a signed release, mediation or arbitration result if required by the contract, or a court order.
Escrow holders can file an interpleader action to let a court decide. Many disputes settle through negotiation once the contract terms and timelines are reviewed. Clear documentation and timely notices help resolve issues faster.
Tips for first‑time and move‑up buyers
First‑time buyers: Use your inspection and financing periods fully. Do not overcommit cash you will need for closing or reserves. Ask questions early so you understand each contingency and what it protects.
Move‑up buyers: If the sale of your current home is part of your plan, coordinate both timelines carefully. Bridge financing or a home‑sale contingency can affect how sellers view your offer. Consider a stronger deposit only after you evaluate the risks and your lender’s guidance.
All buyers: In competitive listings, a larger deposit or stronger terms can help, but only if you are comfortable with the protections in your contract. Engage your agent and your chosen title or settlement company early so everyone is aligned on process and safety.
Final thoughts
Earnest money is a powerful tool. It shows sellers you are serious and can make your offer more competitive. With the right contract terms, clear deadlines, and careful delivery, you can protect your deposit and move confidently from offer to closing in Maryland City.
If you want local guidance tailored to your goals, reach out to the team that combines deep community roots with concierge‑level support. Connect with The Trish Mills Team to plan your next steps.
FAQs
Is earnest money required by Maryland law?
- No. There is no statewide law that requires it; it is a contract term that is customary in practice.
How much earnest money do Maryland City sellers expect?
- Many buyers use 1% to 3% of the price, with higher deposits in competitive situations and fixed amounts like $1,000 to $5,000 for some entry‑level purchases.
When is earnest money due after offer acceptance?
- The contract sets the deadline. Common practice is within 1 to 3 business days or “upon ratification,” but always follow your contract.
Can I get my earnest money back after a bad inspection?
- Usually yes if you terminate within the inspection period and provide proper written notice under the contract.
What happens if I miss a contingency deadline?
- Your deposit may be at risk if you miss deadlines or waive protections and later do not close for a reason not covered by the contract.
Who decides when the escrow releases funds?
- The escrow holder disburses only with a joint written release, as directed by the contract, or under a court order if there is a dispute.
Is earnest money the same as my down payment?
- Not exactly. Earnest money is a good‑faith deposit applied at closing, while your down payment is the larger amount you bring to closing to complete the purchase.
