Have you heard you need “earnest money” to buy a home in Anne Arundel, but you are not sure how much or what it actually does? You are not alone. This small but important deposit can shape how strong your offer looks and how protected your money is if plans change. In this guide, you will learn what earnest money is in Maryland, typical amounts for Anne Arundel County, how and when it is paid, how contingencies protect you, and what happens if a deal falls through. Let’s dive in.
Earnest money basics in Maryland
Earnest money, sometimes called a good‑faith deposit, shows the seller you are serious about buying while you work through the contract’s contingencies. It is not a fee. If you close, it is usually applied to your down payment and closing costs.
Maryland does not require earnest money by law, but it is common in residential contracts. The contract will name an escrow holder and set the rules for deposit timing, how funds are held, and how they are released. Local practice in Anne Arundel follows these contract rules and standard escrow procedures used by brokers, title companies, and attorneys.
How much in Anne Arundel?
In many local situations, buyers offer roughly 1 to 3 percent of the purchase price as earnest money. In more competitive settings, like multiple‑offer homes in Annapolis, Severna Park, or Edgewater, buyers often increase the deposit to strengthen their offer. You can adjust your amount based on price point, your financing profile, and how many protections your contract includes.
What can push your deposit higher
- Intense competition or low inventory on a specific listing
- Higher price point or luxury property
- Fewer contingencies in your offer, which can be balanced by a larger deposit
- Desire to signal strong commitment when timelines are tight
When a smaller deposit fits
- Slower listings or properties with longer days on market
- Offers with comprehensive protections, such as inspection and financing contingencies
- When you need to keep cash available for inspections, repairs, or closing costs
Where and when your deposit goes
Your contract will identify the escrow holder. In Maryland, it is common for a title company or settlement agent to hold the funds, though a listing or buyer’s brokerage trust account or an attorney can also serve this role. Always confirm who holds the funds in writing.
Timing depends on your contract. You may present funds with the offer or within a set period after ratification, often within a few days. Follow the exact deadline in your contract and get a written receipt.
What your receipt should include
- Deposit amount and date received
- Your name and the property address
- The escrow holder’s details and confirmation that funds are in a trust or escrow account
Contingencies that protect you
Contingencies are your safety net. If you follow the timelines and notice rules in your contract, these can allow you to cancel and recover your earnest money:
- Inspection: If you discover issues and cannot reach agreement within the inspection period
- Financing: If you cannot obtain a mortgage commitment by the stated deadline
- Appraisal: If the home appraises below the contract price and renegotiation fails
- Title/Survey: If title defects or survey problems are not resolved
Track every deadline carefully and deliver notices on time. Missing a notice date is a common way deposits become nonrefundable.
When you could lose your deposit
If you default after your contingencies are waived or expire, the seller may be entitled to keep the earnest money as liquidated damages, depending on the contract. Many Maryland contracts include a clause that allows this remedy. If the seller defaults, you typically can recover your deposit and may have other remedies spelled out in the contract.
If a deal falls through
If you properly cancel under a valid contingency and within the deadlines, you should expect your earnest money back. Usually both parties sign a mutual release instructing the escrow holder how to disburse funds. If there is a disagreement, the escrow holder may hold the funds until both parties agree or a court order or dispute‑resolution process directs the release.
Step‑by‑step: handle earnest money like a pro
- Before you offer
- Set a deposit that balances strength and flexibility. Many buyers use 1 to 3 percent, then adjust based on listing competitiveness.
- Line up your payment method. If wiring, verify instructions by phone using a trusted number.
- Confirm the escrow holder and deposit deadline in your contract.
- When you deposit
- Deliver funds by the contract deadline.
- Get a written receipt showing amount, date, property, and escrow account.
- Ask how funds are held and how release requests are handled.
- During the contract
- Track every contingency deadline and send timely notices.
- Keep your lender, title company, and agent aligned on dates and documents.
- If termination is likely
- Review the contract language on your contingency and notice steps.
- Request a mutual release to return funds if you met the terms.
- If there is a dispute, follow the contract’s mediation or arbitration path, or consult an attorney on next steps.
Safe payment tips
- Verify wire instructions by phone using a known, trusted number from your title company or brokerage.
- Never rely solely on email for routing details.
- Confirm the escrow holder’s legal name before sending any funds.
Key takeaways for Anne Arundel buyers
- Earnest money signals commitment and becomes part of your cash to close if you settle.
- In many local scenarios, 1 to 3 percent is common; increase for competitive listings or stronger terms.
- Your contract controls timing, escrow holder, protections, and how funds are released.
- Contingencies protect your deposit, but only if you meet notice deadlines.
- Keep funds accessible and document everything with written receipts.
If you want a clear plan for deposit size, timelines, and protections tailored to your target neighborhood, reach out to a trusted local advisor. For calm, expert guidance from offer to closing, connect with Jeannine Wayson.
FAQs
Is earnest money required in Maryland real estate offers?
- No. It is not required by law, but it is commonly included and expected in Maryland residential contracts.
How much earnest money should I put down in Anne Arundel?
- Many buyers offer 1 to 3 percent, adjusting up for competitive listings or down when protections are stronger and timelines are longer.
Who holds the earnest money in Maryland?
- The contract names the escrow holder, which is often a title company or settlement agent, or a brokerage trust account or attorney.
When is earnest money due after my offer is accepted?
- Your contract controls the deadline. Many require delivery with the offer or within a short window after ratification.
When is earnest money refundable to the buyer?
- If you terminate under a valid contingency and meet notice deadlines, the deposit is typically returned per the contract’s release procedures.
What happens if the seller defaults on the contract?
- Buyers usually recover their earnest money and may have other remedies allowed by the contract, such as specific performance or damages.
Are wire transfers for deposits safe?
- Yes, when you follow verified escrow instructions and confirm routing details by phone using a trusted number to avoid wire fraud.
