Are you getting ready to write an offer in San Carlos? The earnest money deposit can help your offer stand out, yet a misstep can put real dollars at risk. In a high-price market like the Peninsula, understanding how deposits work is essential. This guide explains what earnest money is, typical amounts in San Carlos, the timing and mechanics, key contingencies, and a simple checklist to protect your funds. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you include with your offer to show the seller you are serious. In California, the escrow or title company holds the deposit and follows the written instructions in the purchase agreement. If the sale closes, the deposit is credited to your down payment and closing costs. If the sale cancels under a permitted contingency, you typically receive the deposit back according to the contract.
If a buyer breaches the contract without an allowed reason, the seller may try to keep the deposit or pursue damages based on the agreement. The escrow holder does not decide who is right. It follows the contract and requires proper written instructions before releasing funds.
How much in San Carlos
On the Peninsula, earnest money is often expressed as a percentage of the price. A common range is about 1 to 3 percent. Because San Carlos home prices are high relative to many markets, deposits translate into larger dollar amounts. You will often see deposits from the tens of thousands of dollars to six figures for higher-priced homes.
Your exact deposit depends on the property and the competition. Many buyers align with the percentage range rather than a fixed number. Condos and entry-level homes usually have lower deposits in dollars, but amounts are still higher than many national markets due to local prices.
Factors that increase deposits
- Multiple offers or competitive bidding
- Shortened or waived contingencies
- Cash offers or investors seeking to stand out
- Seller or listing guidance that prefers a larger deposit
Factors that keep deposits lower
- Strong contingencies for inspection, loan, and appraisal
- Buyer cash constraints or a desire to preserve liquidity
- Listings with more days on market and fewer competing bids
When you pay and how funds are held
Your offer states the deposit amount and the timing. Once the seller accepts, the contract sets a deadline to get funds into escrow, often within a few business days. Follow the timing in the purchase agreement to avoid default.
Escrow and title companies typically accept deposits by wire transfer or cashier’s check. For larger sums, wire is common. The escrow holder will issue a receipt and hold the funds until closing or until both parties provide written instructions for a different outcome.
If the sale closes, the deposit is applied to your closing funds. If you cancel under a valid contingency within the deadline, escrow returns your deposit according to the contract. If there is a dispute, escrow generally requires signed mutual instructions or a court order to release funds.
Wire security reminder
Wire fraud criminals target real estate deposits. Confirm wiring instructions by phone using a number you already know for the escrow company. Do not rely on contact details inside an email. Expect secure portals and verification steps, and keep all receipts and confirmations.
Contingencies that protect your deposit
Contingencies give you time to verify the property and your financing, and they outline when you can cancel with your deposit returned per the contract.
- Inspection contingency: Lets you inspect the property and request remedies. If you cancel within the period under the contract, your deposit is typically returned.
- Loan contingency: Protects you if financing cannot be obtained within the allowed window and you cancel under the agreement.
- Appraisal contingency: Helps if the appraisal comes in below price and you choose to cancel or renegotiate per the terms.
- Title contingency: Allows cancellation if title issues cannot be cleared.
- Sale-of-home contingency: If your offer depends on selling your current home, you must meet the deadlines to preserve your protections.
Most contingencies have deadlines for removal. After you remove a contingency, or the deadline passes without cancellation, you usually lose the right to an unconditional return of the deposit for that item. Waiving contingencies can make your offer stronger, but it raises the risk that you could forfeit your deposit if you back out for a reason related to the waived item.
A smart San Carlos buyer checklist
Before you write the offer
- Have deposit funds ready and liquid in the account you will use. On the Peninsula, be prepared for higher dollar amounts.
- Secure a strong lender pre-approval. This strengthens your offer and supports a thoughtful contingency plan.
- Ask your agent for recent local examples so you understand deposit norms for similar San Carlos homes.
While drafting the offer
- Specify the deposit amount, the deadline to deliver funds to escrow, and the escrow or title company that will hold them.
- Align contingencies with your risk tolerance. Shorten or waive only after discussing with your agent and lender.
- Balance deposit size with your overall strategy. A larger deposit can help, but it should match your comfort level and protections.
Right after acceptance
- Send funds to escrow by the contract deadline and get a written receipt.
- Confirm wiring instructions over the phone using a known number. Store all confirmations.
- Keep copies of your signed offer, counters, and escrow details in one place.
During contingency periods
- Book inspections promptly and deliver any notices within the inspection window.
- Track appraisal and loan milestones and keep your lender looped in.
- If you need more time, request an extension in writing through an amendment.
If you must cancel
- Cancel in writing within the applicable contingency period, and notify both the listing agent and escrow.
- Provide any documentation required by the contract so escrow can return your deposit.
If the seller claims default
- Ask escrow what instructions they need. Do not accept a unilateral disbursement you did not authorize.
- If the amount is large or facts are complex, consider legal advice on next steps.
Practical house rules for Peninsula offers
- In highly competitive San Carlos situations, consider a deposit toward the higher end of 1 to 3 percent, but only if your contingency plan and risk tolerance support it.
- Avoid waiving both inspection and appraisal contingencies unless you can absorb potential losses and you fully understand the risks.
Common mistakes to avoid in San Carlos
- Not having funds liquid before you write the offer
- Missing the deposit deadline set in the purchase agreement
- Waiving protections without a clear plan or verified lender support
- Ignoring wire security steps or sending funds to unverified instructions
- Assuming escrow can release funds without written mutual instructions
How we help you win and protect your deposit
Buying in San Carlos requires a clear strategy and tight execution. You get guidance on deposit size, timing, and contingency structure that fits your goals and the listing dynamics. We coordinate with escrow and your lender, keep strict track of deadlines, and help you avoid wire-fraud pitfalls and documentation gaps.
If you want a private, straightforward conversation about your offer plan, reach out to Breakwater Properties. We combine local market experience with practical detail work so you can move with confidence.
FAQs
What is earnest money in a California home purchase?
- It is a good-faith deposit held by escrow or title to show you are serious, applied to your closing funds if the sale completes.
How much earnest money do San Carlos sellers expect?
- A common range is 1 to 3 percent of the price, which often equals tens of thousands of dollars or more in this market.
Who holds the earnest money and can the seller access it?
- Escrow or title holds the funds, not the seller or listing agent, and will only release them based on written instructions that follow the contract.
When do you get your earnest money back if a deal falls through?
- If you cancel within a permitted contingency period under the contract, escrow typically returns your deposit after receiving proper documentation.
What happens if there is a dispute over the earnest money in San Mateo County?
- Escrow will usually require mutual written instructions or a court order before releasing funds, and may interplead the money if parties cannot agree.
How can you reduce the risk of losing your deposit in a competitive offer?
- Keep key contingencies you need, meet all deadlines, verify wiring, and size your deposit to match both market conditions and your comfort with risk.
