Shopping for a condo or townhome in Denver and wondering how much earnest money you need to put down? You are not alone. First-time buyers often hear mixed advice about “good-faith deposits,” refunds, and risks if a deal falls apart. In this guide, you will learn exactly how earnest money works in Colorado, what is typical in LoHi, RiNo, and Wash Park, and how to protect your deposit from contract to closing. Let’s dive in.
Earnest money basics in Colorado
Earnest money is a deposit that shows a seller you intend to buy. It is usually applied to your purchase price or cash to close at settlement, so it is not an extra fee. Think of it as an early portion of your funds that sits in escrow while you work through the contract.
In Denver, most buyers and sellers use standardized Colorado purchase contracts. These forms specify where your deposit goes, who holds it, when you must deliver it, and what happens if either side defaults. The contract also sets contingency deadlines for inspection, appraisal, financing, title, and HOA document review. If you end the deal within a valid contingency and follow notice rules, you generally get your earnest money back.
The contract may include a liquidated damages option that lets a seller keep the deposit if the buyer breaches. Parties can also choose other remedies or dispute resolution paths. The key is to know your specific deadlines and remedies before you sign.
Typical amounts in Denver condos and townhomes
There is no single “right” amount, because the market and price point matter. In normal conditions for Denver condos and townhomes, many buyers offer $2,500 to $10,000. In hotter segments or multiple-offer situations, expect 1% to 3% of the purchase price or a flat five-figure deposit like $10,000 to $25,000 to stand out. On higher price points, the percentage can translate into larger numbers.
What to expect in LoHi, RiNo, and Wash Park
Urban neighborhoods can be competitive, especially for well-priced units or listings with standout amenities. If you are targeting LoHi or RiNo at higher price points, a 1% deposit can quickly reach $7,000 to $10,000+. In Wash Park, where desirable townhomes can draw multiple offers, buyers often strengthen their position with higher deposits or tighter timelines. Use percentages to scale with price, but be ready to discuss flat-dollar strategies when a smaller purchase price makes 1% feel outsized.
Factors that shape your deposit
- Seller expectations and how competing offers are structured
- Your risk tolerance, especially if you plan to shorten or waive contingencies
- Financing type and strength of your approval
- Property condition, days on market, and whether the seller wants a quick close
- HOA complexity, since condo deals include a document review period that can trigger cancellations
Who holds your deposit and when it is due
Your contract will name the escrow holder, which is commonly a title company, a closing attorney, or a brokerage trust account. These parties must follow Colorado rules for handling client funds, including recordkeeping and segregated trust accounts.
The contract also states the deposit deadline. A common practice is delivery within 1 to 3 business days after mutual acceptance, but this is negotiable. Once your funds are deposited, you should receive confirmation, and the money remains in escrow until closing or an agreed release.
Contingencies and your refund rights
Contingencies give you defined windows to investigate the property and financing. If you end the deal within one of these windows and follow the contract’s notice and timing rules, you generally recover your earnest money.
Common contingencies that protect you
- Inspection: You can object to issues and negotiate repairs or credits. If you terminate within the deadline, your deposit is typically refundable.
- Appraisal: If the appraisal is low and you choose not to proceed within the appraisal deadline, you can terminate and preserve your deposit.
- Financing: If your loan is denied despite good-faith effort within the financing deadline, you can terminate and keep your earnest money.
- HOA document review: Critical for condos and townhomes. If the HOA documents are not acceptable to you and you act within the review period, you can terminate and receive a refund.
- Title and survey: If issues arise that cannot be cured, you can object and potentially terminate.
When your earnest money is at risk
Your deposit is at risk if you cancel for reasons not covered by the contract, miss a deadline, or otherwise breach the agreement. Whether the seller can keep the deposit depends on the contract terms and the remedies selected. Many situations end in a negotiated solution, but you want to avoid preventable risk by tracking dates and delivering proper notice.
If a deal falls through
Several outcomes are common when a contract does not close. If you terminate within a valid contingency and follow the process, your escrowed funds are returned. If the seller breaches, you are typically entitled to a refund and may have other remedies under the contract. If you breach without a contractual excuse and the seller elects the available remedy, the seller may retain the deposit as liquidated damages.
How disputes are handled
Escrow holders do not decide winners. They hold the funds until both sides sign written instructions or a court or arbitrator directs release. Disputes are often resolved through a mutual release, sometimes with a negotiated split. If the parties cannot agree, options include mediation, arbitration, or court proceedings such as interpleader. Title companies and brokers follow Colorado rules and the contract, which is why clarity on deadlines and notices is so important.
Smart ways to structure your offer
Winning in competitive neighborhoods does not require unnecessary risk. You can signal strength while keeping key protections in place.
Keep strength without excess risk
- Match the market: Ask your agent to benchmark recent accepted offers in your target buildings and blocks.
- Use percentage or flat-dollar wisely: Percentages scale at higher price points, while flat-dollar deposits can be efficient for lower-priced units.
- Keep essential contingencies: Inspection, appraisal, financing, and HOA review are there to protect you. Waiving them increases the chance of losing your deposit.
- Consider staged deposits: Propose a smaller initial deposit with a second deposit due when contingencies are removed. This approach can balance seller confidence with your risk control.
- Be cautious with nonrefundable deposits: Only agree if you fully understand the terms and risks, and you are comfortable with the possibility of losing that money.
Lender and documentation tips
- Expect to document your earnest money with bank statements and proof of funds.
- If you plan to use gift funds, coordinate early with your lender and title company to meet documentation rules.
- Keep clear records of wires, receipts, and all communications about the deposit.
Quick buyer checklist
- Confirm who will hold your earnest money and the delivery deadline.
- Send funds early enough to clear by the deadline and keep the receipt.
- Calendar all contingency dates, including inspection, appraisal, financing, title, and HOA review.
- Follow notice procedures in writing if you object or terminate.
- Discuss trade-offs with your agent if the seller requests a larger deposit or shortened timelines.
Make your next step easy
You deserve clear guidance from contract to closing. If you want help calibrating your earnest money, setting smart deadlines, or comparing risk across LoHi, RiNo, and Wash Park, our team is ready to coach you through each decision. Work with a local, high-volume team that pairs market intel with steady, responsive service. Connect with the Kissel Group to map out your strategy.
FAQs
How much earnest money do Denver condo buyers usually offer?
- For many condos and townhomes in normal conditions, expect $2,500 to $10,000. In competitive situations, 1% to 3% of the purchase price or a flat $10,000 to $25,000 is common.
Who holds the earnest money in Colorado transactions?
- A named title or escrow company, a closing attorney, or a brokerage trust account holds the funds according to the contract.
Can I get my earnest money back after a bad inspection?
- Yes, if you act within the inspection deadline and follow the contract’s notice and termination procedures, your deposit is typically refundable.
What if my mortgage is denied?
- With a proper financing contingency, if your loan is denied within the deadline and you terminate correctly, you should recover your deposit.
Can a seller keep my earnest money if the deal fails?
- Only if you breach the contract and the seller has the right under the chosen remedies. Many disputes are resolved through negotiation, mediation, or arbitration.
Is offering nonrefundable earnest money a good idea?
- It can strengthen an offer, but it increases your risk. Consider it only after evaluating property condition, financing strength, timelines, and your comfort with potential loss.
