What is an earnest money deposit?
An earnest money deposit (EMD) is the good-faith funds a buyer wires to escrow after offer acceptance. In San Diego County, deposits often fall around 1%–3% of the purchase price, though competitive offers sometimes go higher.
While contingencies remain in place and the buyer cancels within the contract rules, the deposit is typically refundable. After contingency removal, buyer default can put the deposit at risk—especially if liquidated damages were agreed.
Escrow—not the seller personally—should hold the EMD. Always confirm wiring instructions by phone using a verified escrow number; wire fraud remains a real threat.
How deposits interact with the RPA
- Initial deposit amount and delivery deadline appear in the purchase agreement.
- Increased deposits may be used strategically in multiple-offer settings.
- Liquidated damages clauses, when initialed, can cap seller recovery at the deposit (subject to form limits and law).
- Dispute paths include mediation/arbitration elections in the contract.
Buyer protection checklist
- Deliver the deposit on time through escrow’s verified instructions
- Calendar contingency removal dates—see contingencies
- Do not remove loan/appraisal contingencies until financing is solid
- Align offer strength with Buy a Home in San Diego
Sellers evaluating offer quality should weigh deposit size with lender strength and contingency length—see Sell Your Home in San Diego and multiple counters.
Jed Bratt and Jamile Storck help clients size deposits to the competitive set without taking unnecessary risk.
Where the money sits during escrow
Escrow holds the deposit in a trust account pending closing or cancellation instructions. At a successful closing, funds apply to the buyer’s cash-to-close. If the deal cancels under a valid contingency, escrow typically needs mutual instructions or clear contractual authority to release funds. Disputes can freeze the deposit until resolved.
Liquidated damages in plain language
When both parties initial liquidated damages provisions in the residential forms, they may agree that the deposit (subject to stated limits) is the seller’s remedy if the buyer wrongfully fails to close after contingencies are removed. This is a major reason buyers should not casually remove contingencies. Ask your agent to walk through a default scenario before you initial.
Competitive deposits without recklessness
Increasing the deposit can strengthen an offer, especially alongside strong financing. It should not exceed what you can risk under the contract path you chose. Pair deposit strategy with contingency strategy—never in isolation.
If a seller asks for an unusually large early deposit with short contingency periods, slow down and model the downside with your agent before you agree.
Proof of deposit and seller confidence
Listing agents often ask escrow to confirm receipt of the deposit. Prompt delivery builds credibility after a competitive acceptance. Late deposits create distrust and can become a contract default if deadlines are missed.
If your funds are arriving from a sale abroad or a brokerage transfer, start movement early and keep escrow informed. International wires and bank compliance reviews add days you may not expect.
Release scenarios without drama
When both parties agree to cancel under a contingency, mutual escrow instructions usually release the deposit quickly. When they disagree, the deposit can sit while mediation or other dispute paths run. Document your contingency notices carefully so your cancellation story is clear.
How deposit size signals strength
In a stack of similar offers, a larger deposit can signal commitment—especially when paired with a credible lender letter. It is not a substitute for a workable price or clean contingency plan. Think of deposit size as one dial among several, not the only lever.
Some buyers stage an initial deposit and an increased deposit at contingency removal. That structure can balance early risk with later commitment. Draft the timing clearly so escrow and the seller know exactly when funds arrive.
Never improvise wire instructions
If an email says escrow “updated” the wiring account, assume fraud until a verified phone call proves otherwise. Call a known number, confirm the file name, and read account digits back. This single habit prevents catastrophic losses that no contingency can fix.
How deposits interact with appraisal gaps
A large earnest money deposit does not replace cash needed for an appraisal shortfall. Model both numbers separately. Buyers sometimes over-concentrate on deposit size in multiple offers and under-reserve funds for gap coverage or repairs—then feel trapped after contingency removal.
Ask Jed Bratt or Jamile Storck to pressure-test deposit size against your loan program, contingency plan, and liquid reserves before you sign an aggressive offer.
Working with a San Diego County–focused team keeps these details practical: timelines, disclosures, financing, and neighborhood fit belong in one plan. Explore Buy a Home in San Diego, Sell Your Home in San Diego, and the Realtor FAQ, then reach Jed Bratt or Jamile Storck from the realtor box when you are ready for a property-specific strategy.
Earnest money FAQ
Is 1% enough in San Diego?
Often yes for many segments, but hotter listings may expect more. Strength is relative to price point and competing offers.
Can I use a personal check?
Escrow instructions govern. Many prefer wires. Never trust emailed wire changes without a callback to a known number.
What if the seller defaults?
Buyers may pursue remedies under the contract, including return of the deposit and other claims. Legal advice may be needed for disputes.
Jed Bratt & Jamile Storck
Jed Bratt is an 8-year Navy veteran, California Real Estate Broker, Realtor®, and active investor. He bought his first investment property at 19 and began helping fellow service members use their VA loans in 2010 while still on active duty. After his honorable discharge in 2014, he transitioned to full-time real estate, serving military and civilian clients from Imperial Beach to Carlsbad. Known as @TheRealEstateJedi on YouTube, he shares neighborhood tours, market insights, and practical guidance for anyone considering a move to San Diego.
Jamile Storck is a San Diego Realtor since 2012 and a local homeowner since 2009. Originally from Vitória, Brazil, with a background in international trade and construction, she has personally bought, renovated, and sold homes across California and other states through different market cycles and loan programs. Having lived all over San Diego and even relocated to Austin while eight months pregnant, she understands the stresses, setbacks, and negotiations involved—and after guiding hundreds of clients through the process, she brings that same resourcefulness and commitment to every transaction, helping clients move forward with confidence.