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Precautions Before You Pay Earnest Money on a Home

Tap each step to see it in order.

  1. Verify the seller against the title record

    Before sending any money, pull the current title record and confirm the seller's name matches the registered owner, and check that there are no red flags like an existing lien or claim against the property.

  2. Confirm the receiving account is in the seller's name

    Earnest money should be sent to an account in the seller's own name. If you're asked to send it to an agent or a third party's account instead, verify a written power of attorney and ID before deciding, and think twice if anything feels off.

  3. Put preliminary deposit terms in writing

    If you're sending a small preliminary deposit to hold the property before the formal contract is signed, get the refund conditions -- what happens if the deal doesn't go through -- in writing, even if it's just a text message or a short note.

  4. Understand the deposit amount and penalty clause

    Earnest money is often set around 10% of the sale price, and it commonly doubles as the reference amount for a penalty if either side backs out of the contract. Make sure you understand both the amount and what the penalty clause actually says before you pay.

  5. Get a receipt and sign the contract at the same time

    Sign the sale contract at the same time you pay the earnest money, and keep a transfer record and receipt as proof of payment.

  6. When in doubt, hold off on paying

    If you haven't finished verifying the paperwork, or something the seller or agent says doesn't add up, it's safer to delay payment and ask more questions than to send the money anyway.

Earnest money is hard to get back once it's sent

Paying earnest money immediately strengthens the binding nature of a deal, so it's worth carefully checking the owner, the receiving account, and the terms before you send it. This is general information and doesn't replace advice from a legal professional.

If a dispute has already happened

If you're already in a dispute over getting your deposit back, our guide on handling a disputed earnest money deposit covers what to do next.

Frequently Asked Questions

I've only paid a small preliminary deposit -- can I still cancel?

It depends entirely on what refund conditions you agreed to at that stage, which is exactly why it's important to put those terms in writing, even informally, before sending a preliminary deposit.

Is it okay to send the deposit to the real estate agent's account?

In principle, it's safer to pay a seller directly into their own account. If an agent or a third party asks you to send it to their account instead, confirm the power of attorney and think carefully before agreeing.