You found the right home in Denver and you are ready to write an offer. Then your agent asks, “How much earnest money do you want to put down?” If that question makes you pause, you are not alone. Earnest money affects how strong your offer looks and how much money you put at risk. In this guide, you will learn what earnest money is, what amounts are typical in Denver, when it is refundable, and how Colorado contract deadlines work so you can compete with confidence. Let’s dive in.
What earnest money means in Denver
Earnest money is a good-faith deposit you deliver after a seller accepts your offer. It shows you intend to complete the purchase. In Colorado, funds are held in escrow by the title company, an escrow company, or sometimes a broker trust account named in the contract. At closing, the deposit is credited toward your cash to close.
In Denver’s often tight inventory environment, a solid earnest deposit signals commitment. It also gives the seller some security if a buyer defaults without a valid contractual reason. For you, it is a tool to negotiate contingencies and timelines like inspection, financing, appraisal, title, and survey.
Typical Denver amounts
There is no one-size number, but Denver patterns are consistent:
- Entry-level homes or condos: often $2,000–$5,000.
- Mid to higher-priced homes: commonly 1%–2% of the purchase price.
- Highly competitive scenarios: sometimes 2%–3% or more to stand out.
Amounts vary based on price point, how competitive the listing is, your financing type, and seller expectations. Larger deposits are viewed favorably because they signal a higher likelihood of closing. If you want protection, you can pair a moderate deposit with strong contingency terms and realistic deadlines.
Colorado delivery deadlines
Colorado uses a standard contract where you and the seller agree on the deadline for delivering earnest money. The contract also names who will hold the funds and acceptable payment methods.
- Typical Denver delivery windows are 1–5 business days after acceptance. Many offers use 2–3 business days.
- In very competitive situations, sellers may request faster delivery, sometimes within hours. Only offer this if your funds are ready.
- Buyers commonly send funds by wire transfer, certified check, or ACH to the title or escrow company named in the contract.
The earnest delivery deadline is separate from your contingency deadlines. Paying the deposit does not waive inspection, appraisal, or financing protections unless you choose to remove them in writing.
When earnest money is refundable
As a general principle, your earnest money is refundable if you terminate the contract for a reason allowed under your written contract and within the stated deadlines. Common examples include:
- Inspection contingency. If you give timely written notice of unacceptable inspection items and terminate within the inspection period, your deposit is typically returned.
- Financing contingency. If you cannot obtain your loan by the deadline and follow notice requirements, your earnest money is usually refundable.
- Appraisal contingency. If the appraisal is below the purchase price and you properly exercise your contract rights, you can terminate and recover earnest money.
- Title or survey issues. If title defects or survey matters are unacceptable and unresolved, and you terminate per the contract, funds are returned.
Always follow the exact notice steps and timelines in the contract. Keep written proof of delivery and communication.
When it can be forfeited
A seller may be entitled to keep earnest money if a buyer breaches the contract and does not have a valid contractual reason to terminate. The contract sets out the remedies and dispute procedures. If there is a disagreement, the escrow holder can keep funds in the account until both parties agree or a court or arbitrator orders release.
Before you tighten timelines or waive protections, weigh how much earnest money you are truly comfortable risking if you cannot close.
How to balance risk and strength
You want to be competitive without overexposing yourself. Consider these strategies based on your situation:
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First-time or relocating buyers who want protection:
- Use a moderate deposit such as $1,000–$5,000 or around 1%, depending on price.
- Keep inspection, financing, and appraisal contingencies with realistic deadlines.
- Set delivery at 2–3 business days and coordinate with your lender and title company in advance.
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Buyers in multiple-offer situations:
- Increase earnest money to 1%–2% or a larger flat sum to signal strength while keeping key contingencies.
- Or shorten contingency timelines if you can accept higher risk and move quickly on inspection, appraisal, and loan steps.
- Cash or institutional buyers sometimes use unusually large deposits to convey certainty.
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Very risk-tolerant buyers:
- Some buyers waive inspection or appraisal protections and leave large earnest money at risk to win bidding wars. This is high risk and not typical for first-time buyers or anyone reliant on financing.
Buyer checklist for earnest money
Use this quick plan before you write your offer:
- Decide how much you can comfortably put at risk if you default.
- Confirm funds are liquid and ready for delivery within the deadline you propose.
- Ask your agent to review recent offer patterns in your target Denver neighborhood and price tier.
- Set contingency deadlines that are competitive but realistic for inspection, appraisal, loan, title, and survey.
- Name the escrow/title company in the contract and confirm acceptable payment methods.
- Keep records of all deliveries, notices, and communications, including proof of wire, inspection notices, appraisal reports, lender letters, and termination notices.
Smart timeline tips for Denver buyers
- Front-load your logistics. Speak with your lender and the title company before you write the offer so you can meet a 2–3 business day delivery.
- Do not trade away protection you truly need. Shorten the inspection period rather than waiving it entirely, especially with older Denver homes where conditions can surprise new buyers.
- Separate deposit from protections. Remember that delivering earnest money does not cancel your right to use inspection, appraisal, financing, or title contingencies.
- Keep communication formal. Timely written notices preserve your rights to a refund if you need to terminate under the contract.
Work with a local guide
Earnest money is a small part of your cash to close, but it has an outsized impact on your negotiating position. With more than 900 transactions and $300M+ sold, our team uses Denver-tested strategies to help you set the right deposit, choose smart deadlines, and compete without taking on unnecessary risk. If you are buying in Denver or relocating from out of state, let’s craft an offer plan that fits your comfort level and the market.
Have questions about a specific property or contract scenario? Connect with the Kissel Group to get a clear plan before you write.
FAQs
What is earnest money in a Denver home purchase?
- It is a buyer’s good-faith deposit held in escrow after acceptance, credited to you at closing, and used to show commitment to the seller.
How much earnest money is typical for Denver condos or entry homes?
- Many offers use flat amounts in the low thousands, often around $2,000–$5,000, depending on price and competition.
How quickly must I deliver earnest money in Colorado?
- The contract sets the deadline. In Denver, 1–5 business days is common, with many offers using 2–3 business days after acceptance.
Can I get my deposit back if the inspection reveals issues?
- Yes, if your contract includes an inspection contingency and you give proper notice and terminate within the inspection period.
Can the seller keep my earnest money if my loan falls through?
- If you have a financing contingency and follow notice rules by the deadline, the deposit is typically refundable. Without a valid reason, the seller may seek to keep it per the contract.
Where will my earnest money be held in a Denver transaction?
- Usually with the title or escrow company named in the contract. Wire transfer, certified check, or ACH are common payment methods.
