Earnest money in a cash home sale
The buyer's deposit shows they're serious. Here's who holds it, what happens to it at closing and what happens if the deal falls apart.
No obligation. No pressure. Takes about 2 minutes.
The short answer
Earnest money is the deposit a buyer puts down after you both sign the contract, to show they're committed. In a cash sale it's usually held by the title company or closing attorney named in the contract, not by you or the buyer. At closing it counts toward the price; if the sale doesn't close, your contract decides who gets it.
Step by step
-
1
How much it is
There's no fixed amount. It's whatever you and the buyer agree to in the contract. A bigger deposit gives the buyer more to lose if they walk away without a right to.
-
2
Who holds it
A neutral escrow holder, usually the title company or closing attorney named in the contract. Ask them to confirm the deposit arrived by the contract deadline.
-
3
At closing
The deposit is credited toward the purchase price and shows up on the settlement statement.
-
4
If the sale doesn't close
The contract says when the buyer gets the deposit back, for example if an inspection period lets them cancel, and when the seller can keep it. If you and the buyer disagree, the escrow holder may keep the money until the dispute is settled.
Cash offer vs listing
Example: a $250,000 home
| Offer | $205,000 |
|---|---|
| Repairs | $0 |
| Commissions | $0 |
| Closing costs | $0 |
| You walk away with | $205,000 |
| In 7 to 14 days | |
| Sale price | $250,000 |
|---|---|
| Repairs | about $8,000 |
| Commissions | about $13,800 |
| Closing and holding | about $6,000 |
| You walk away with | about $222,200 |
| In 60 to 90 days | |
Example only. Your numbers depend on your home and market.
A solid deposit is one sign of a real buyer; the other half is the number, and we show the cash offer next to what listing could net.
Frequently asked questions
Can the buyer take the deposit back whenever they want?
Only when the contract allows it, such as during an inspection or due diligence period. Read those clauses before you sign.
Should I hold the earnest money myself?
It's safer with a neutral escrow holder named in the contract, like the title company or closing attorney, so neither side controls it alone.
What are warning signs with earnest money?
A tiny deposit paired with a long, open-ended right to cancel, or a deposit that never reaches the escrow holder by the deadline.
Who are you?
We are real estate investors based in Baltimore, helping homeowners since 2016. We buy houses directly for cash. We are not a licensed real estate brokerage and do not list homes ourselves; if listing could get you more, we show you the math so you can choose.