Earnest Money Explained: How Much and When You Get It Back
I still remember the look on my buyer's face last month when I mentioned earnest money. "Wait, I have to give them money before I even own the house?"
You're not alone if that sounds confusing. In my 20 + years helping people buy homes here in Forest Grove, earnest money questions come up in almost every transaction. Let's clear up the confusion.
What Earnest Money Actually Is
Think of earnest money as your "I'm serious about this" deposit. When you make an offer on a house, you're asking the seller to take their home off the market and trust that you'll follow through.
The earnest money shows you mean business. It goes into a trust account held by the title company, not directly to the seller.
How Much You'll Need in Forest Grove
Around here, earnest money typically runs 1-2% of the purchase price. On a $450,000 home (pretty typical for Forest Grove right now), that's $4,500 to $9,000.
I've seen it go as low as $1,000 on slower-moving properties. In competitive situations, buyers sometimes offer more to stand out.
The amount you offer matters. Too low, and sellers might question if you're serious. Too high, and you're tying up money you might need for inspections or appraisal.
When You Get Your Money Back (And When You Don't)
Here's the part everyone worries about. You get your earnest money back if you back out for reasons listed in your contract contingencies.
You're protected if:
The inspection reveals major problems you're not willing to fix
The appraisal comes in too low and the seller won't negotiate
You can't secure financing (if you have a financing contingency)
The title search shows liens or ownership issues
You lose your earnest money if:
You simply change your mind with no contingency to back you up
You miss your contingency deadlines (this happens more than you'd think)
You back out after removing all contingencies
I had a buyer last year who got cold feet three days before closing. All contingencies were removed. They lost $7,000 in earnest money. It hurt to watch.
The Timeline That Actually Matters
Your contract includes specific dates for each contingency. In Oregon, you typically have 10 days for your inspection contingency and around 21 days for financing.
Miss those deadlines, and you might lose your protection. I keep a detailed timeline for every buyer because one missed date can cost thousands.
Once you close on the house, your earnest money doesn't come back to you separately. It goes toward your down payment and closing costs. You've already paid it.
How to Protect Yourself
Read your contingency dates carefully. Put them in your phone with alerts.
Get your inspection done in the first few days, not the last day of your contingency period. Problems take time to negotiate.
Stay in close contact with your lender. If financing falls through on day 20 of a 21-day contingency, you're cutting it incredibly close.
I track these dates obsessively. I've called clients at 8 PM to remind them we need an answer by midnight or they lose their contingency.
The Real Talk About Earnest Money
Here's what I tell every buyer: earnest money feels scary because it is. You're writing a check for thousands of dollars on a house you don't own yet.
But the contingencies in your contract are strong protections. In all my years doing this, I've only seen buyers lose earnest money when they either missed deadlines or backed out without a legitimate reason.
The key is understanding exactly what you're signing and when every deadline falls. Don't be shy about asking questions. I'd rather explain something three times than have you lose money because something wasn't clear.
Questions I Get All The Time
"Can I use my earnest money for repairs after closing?" No. It's already applied to your purchase. You'll need separate funds for immediate repairs.
"What if I find a better house after making my offer?" Unless something triggers a contingency, you'll lose your earnest money if you walk away.
"Can I increase my earnest money after making an offer?" Yes, and I've suggested this when a buyer really wants to strengthen their position against other offers.
Bottom Line
Earnest money protects both you and the seller. You get to make sure the house actually works for you through inspections and financing. The seller gets assurance you won't waste their time.
Just know your dates, understand your contingencies, and work with someone who won't let you miss a deadline.
I've guided over 500 transactions through this process right here in Washington County. The earnest money part always feels uncertain at first, but it makes sense once you see how the timeline protects you.
Got questions about your specific situation? Every deal is different, and I'm always happy to walk through the details. That's what 20+ years of experience is for.
