Worried about putting down money on a home you have not closed on yet? If you are buying in Phoenix or anywhere in Maricopa County, earnest money is a key part of your offer and a common source of confusion. You want your offer to stand out without risking your deposit.
This guide explains what earnest money is, how it works in Arizona contracts, how much buyers in Phoenix typically offer, and how to keep your deposit protected. You will also get a simple checklist you can use right away. Let’s dive in.
What earnest money is
Earnest money is a deposit you make to show the seller you are serious about buying the home. It signals good faith and helps your offer look stronger in a competitive market.
If the sale closes, your deposit is credited toward your down payment and closing costs. If you cancel within the contract’s contingencies and deadlines, it is generally returned to you. If you default outside those protections and the seller elects a remedy allowed by the contract, your deposit may be forfeited.
How it works in Phoenix
Most resale purchases in Phoenix use an Arizona Association of REALTORS purchase contract. This contract includes a specific line for the Earnest Money Deposit and sets a delivery deadline.
In Arizona, the deposit is commonly held by the title or escrow company that is handling your closing. It can also be held in a broker’s trust account if that is what the contract states. Arizona Department of Real Estate rules require brokers to safeguard client funds in trust accounts.
At closing, the title or escrow company credits your deposit toward what you owe. If the deal is cancelled according to the contract, the escrow holder will release funds based on the signed instructions from both parties or a legal directive.
Who holds the funds
- Typical practice: the title or escrow company listed in your contract.
- Sometimes: a broker’s trust account, if the contract names one.
- You should receive a written receipt from the holder showing the amount and date of deposit.
When you deposit funds
Your purchase contract sets the deadline. In Phoenix, it is common to deliver the funds within 24 to 72 hours after contract acceptance. The actual window is negotiable. Whatever is written in your contract controls, so plan ahead to meet the exact deadline.
How much to offer in Phoenix
There is no fixed amount required by law. Market practice in Phoenix often ranges from a few hundred dollars for very low-price deals to several thousand dollars for typical resale homes. Many buyers use 1 to 3 percent of the purchase price as a rule of thumb, or a flat amount between 1,000 and 5,000 dollars for many single-family homes.
When the market is very competitive, buyers sometimes offer a higher deposit to strengthen their offer. Your exact amount should reflect price point, market conditions, and your comfort level if something goes wrong.
Consider:
- Price and competition. Higher-priced or highly competitive listings may warrant a higher deposit.
- Contingencies. If you plan to waive protections, be cautious about offering a large deposit.
- Financing plan. Align the deposit with your lender’s timeline and your liquid funds.
Luxury and investor considerations
If you are buying a high-end home, the dollar amount of a 1 to 3 percent deposit can be significant. In some cases, buyers choose a strong but measured amount that signals commitment while keeping risk in check until contingencies clear.
Investors focused on speed and certainty sometimes use larger deposits to win the deal, then move quickly through inspections and underwriting. Align your deposit with your acquisition plan and the time you need to complete due diligence.
Keep your deposit refundable
Your contract’s contingencies and timelines are the key to keeping your earnest money protected. Common protections include:
- Home inspection period and resolution process
- Financing or mortgage contingency
- Appraisal contingency
- Title and HOA review periods
Each contingency has a deadline and a notice requirement. If you decide to cancel for a covered reason, you must deliver written notice within the stated timeframe. Late notice can remove your protection and put your deposit at risk.
Tips to protect your deposit:
- Track every deadline in writing and set reminders.
- Send notices by email and signed forms as required, and request confirmation of receipt.
- Do not assume verbal approvals are enough. Use written notices.
- Do not waive contingencies unless you fully understand the risk.
Appraisal shortfalls
If the home appraises below the contract price and you have an appraisal contingency, you can typically cancel and recover your deposit or try to renegotiate. If you do not have that contingency, you may need to cover the difference or risk default, which can put your deposit at risk.
Safety and wire-fraud protection
Wire-fraud scams targeting homebuyers are a known risk. Protect yourself when sending earnest money:
- Verify wiring instructions by calling the title or escrow company at a phone number you find independently, such as from their official website or a business card you already have.
- Do not rely on phone numbers or links that arrive in the same email thread as wiring instructions.
- Consider delivering a cashier’s check in person if advised by the escrow holder.
- Always obtain a written receipt showing the amount and date of deposit.
If a deal unravels
If you cancel within your contract protections, your deposit is generally returned. If you default, the seller may have remedies depending on the contract. These can include retaining the earnest money as liquidated damages, asking a court for specific performance, or suing for actual damages. Outcomes depend on the exact wording of the contract and the facts.
Escrow companies release funds only when both parties sign written instructions or when a court order or arbitration decision directs them. Many Arizona contracts include mediation or arbitration provisions. In practice, many earnest money disagreements are resolved by mutual release and settlement rather than litigation.
If a dispute arises:
- Review your contract deadlines and your written notices.
- Speak with your agent and your escrow or title officer.
- If the parties cannot agree, consult a real estate attorney.
Quick buyer checklist
Use this to keep your earnest money on track in Phoenix.
- Choose an amount with your agent based on price and competitiveness. A common range is 1 to 3 percent or 1,000 to 5,000 dollars for many resale homes.
- Make sure the contract lists the deposit amount, the escrow holder, and the delivery deadline.
- Deliver funds on time and get a written receipt from escrow or the broker.
- Track inspection, financing, appraisal, title, and HOA deadlines. Send all notices in writing on time.
- Keep copies of the contract, addenda, inspection reports, and email confirmations.
- Verify wiring instructions by phone using a trusted number. When in doubt, deliver a cashier’s check in person.
- If you need to cancel, follow the contract notice steps and keep proof of delivery.
- If there is a dispute, request a mutual release and speak with your agent and an attorney if needed.
Work with a team that protects your deposit
Your deposit strategy should match your price point, the neighborhood, and current market conditions. You want an offer that stands out, with the right protections in place. Sacha Blanchet Fine Homes pairs high-level negotiation and market insight with hands-on support so you can move from offer to closing with confidence.
Whether you are securing a luxury residence or an income property, our boutique team brings the structure you need, from contract guidance and scheduling to staging and operations support. We are bilingual and relationship-focused, and we know how to compete in Phoenix, Scottsdale, Paradise Valley, and beyond.
Ready to craft a winning offer and protect your earnest money? Contact Sacha Blanchet Fine Homes to Request a Free Consultation or Home Valuation.
FAQs
What is earnest money in Arizona and how is it used?
- It is a buyer deposit that shows good faith, is usually held by a title or escrow company, and is credited to your down payment and closing costs if the sale closes.
How much earnest money do Phoenix sellers expect?
- There is no set amount, but many buyers use 1 to 3 percent of the price or 1,000 to 5,000 dollars. Competitive listings may call for a stronger deposit.
When do I pay earnest money in Maricopa County?
- Your contract sets the deadline. Common practice is delivery within 24 to 72 hours after acceptance, but the exact timing is whatever your contract states.
Who holds earnest money in Arizona transactions?
- Typically the title or escrow company named in the contract, or sometimes a broker’s trust account. You should receive a written receipt after deposit.
What happens if the appraisal comes in low in Phoenix?
- If you have an appraisal contingency, you can usually cancel and get your deposit back or renegotiate. Without that contingency, you may need to cover the shortfall or risk default.
How do I get my earnest money back if the seller refuses to sign?
- Escrow usually needs a mutual release, a court order, or an arbitration decision. Review your contract and notices, work with your agent, and consult a real estate attorney if needed.
