You find a home you love, then someone asks you to wire thousands of dollars before you even move in. It is normal to wonder what earnest money is, how much to put down, and how you can protect it in Denver. You want to make a strong offer without taking on unnecessary risk. In this guide, you will learn how earnest money works in Colorado contracts, typical amounts in Denver, what safeguards exist, and smart ways to structure your deposit. Let’s dive in.
What earnest money is in Colorado
Earnest money is a good-faith deposit that shows a seller you intend to follow through with a purchase. If you close, the deposit is credited to your cash to close. It usually applies toward your down payment and closing costs.
Colorado buyers and sellers use a statewide standard contract that spells out how earnest money works. The contract states who holds the funds, when you must deliver them, and how funds are released if there is a dispute. The buyer and seller choose the escrow holder in the contract, often a title company or the listing brokerage’s trust account.
Typical amounts in Denver
In many Denver-area transactions, buyers offer 1 to 2 percent of the purchase price as earnest money. On entry-level homes, you still see flat deposits, often 1,000 to 5,000 dollars. On mid-priced homes, 5,000 to 15,000 dollars is common. For higher price points, 1 percent or more is typical.
Market conditions matter. In hotter segments with multiple offers, sellers often expect larger deposits because it signals commitment and financial strength. In slower segments, a modest deposit can be enough if the rest of your terms are solid. Your strategy should reflect your price tier, competition, and comfort with risk.
Quick examples
- 350,000 dollar home: 3,000 to 7,000 dollars is common.
- 600,000 dollar home: 6,000 to 12,000 dollars is common.
- 1,500,000 dollar home: 15,000 dollars or more is common.
Who holds your deposit
Your contract names the escrow agent who will hold the funds in a regulated trust or escrow account. In Denver, funds are commonly held by a title company or the listing brokerage. Title companies are neutral third parties with standardized escrow accounting, which is why many buyers prefer them.
No matter who holds the funds, they must follow Colorado rules for handling client money in trust accounts. Funds are disbursed only according to the contract, a mutual written agreement, or a court order.
Delivery deadlines and receipts
Your contract sets the earnest money deadline. A common practice is delivery within 48 to 72 hours after acceptance, but the deadline is negotiable and must be written into the contract. Make sure the delivery method is clear, whether you are wiring funds, dropping off a check, or using a title company’s secure portal.
Always get written proof of delivery. Keep wire confirmations, check images, and an escrow receipt with the date and amount. Share the receipt with your lender so they can document the deposit as part of your down payment source.
How your money is protected
Earnest money sits in a trust or escrow account managed by the named holder. Those accounts must be reconciled and handled under Colorado rules for client funds. This structure reduces the risk of misuse and keeps a clear paper trail.
Protect yourself by building good documentation habits. Confirm who holds the funds in writing, calendar all your contract deadlines, and keep every receipt and notice. If a dispute arises, the escrow agent will look to the contract and written instructions to decide how to release funds.
Wire safety checklist
- Verify wiring instructions by phone using a number you source directly from the title company or brokerage, not an email in the thread.
- Confirm the company name, account number, and beneficiary match your contract paperwork.
- Send a small test if available, or at least call to confirm receipt right after you wire.
When you can get it back
Colorado’s standard contract includes buyer protections through contingencies and deadlines. If you terminate within a valid contingency period and follow the notice steps, your earnest money is typically refundable.
Common refundable scenarios include inspection issues you cannot resolve within the inspection window, a financing denial when you had a financing contingency and acted in good faith, an appraisal problem covered by the contract, or unacceptable title or HOA documents that are not resolved by deadline. The key is timing and documentation. If you plan to terminate, provide written notice before the deadline in the manner the contract requires.
When you could lose it
You risk losing earnest money if you default, such as failing to close without an allowed contract reason, or missing a contingency deadline and then trying to cancel later. Changing your mind after protections expire can result in forfeiture unless the seller agrees to release some or all funds.
If the seller breaches, you may be entitled to a return of earnest money and other remedies under the contract. Many disputes are resolved by mutual agreement or the contract’s dispute resolution process. Clear documentation and communication help avoid costly delays.
Smart ways to structure your deposit
There is no one-size-fits-all number. Your deposit should show commitment without exposing more of your savings than needed.
- Conservative approach: Offer a reasonable amount for the price tier, often around 1 percent or a few thousand dollars, and keep standard contingency timelines.
- Competitive approach: Increase the deposit to stand out, but pair it with solid financing terms and a clear plan for meeting deadlines. Only consider nonrefundable terms if you fully understand the risk.
- Balanced approach: Keep the deposit moderate, but shorten contingency periods you are confident you can meet, or strengthen your financing approval status.
If a seller requests nonrefundable earnest money or an as-is offer, slow down and assess. Nonrefundable language can remove key protections. Confirm that your lender is comfortable with the contract terms, and complete enough due diligence to feel confident before giving up rights. If you need a tighter timeline, organize inspections and underwriting early.
Need to tailor your deposit strategy to the current Denver market and your budget? Schedule a quick consult with the team at UGotAGuy to align your offer, financing, and timelines.
Lender coordination tips
Tell your lender as soon as you deliver earnest money so they can track it in your file. Expect to provide the receipt, your bank statement showing the withdrawal, and a gift letter if someone helped fund the deposit. Ask your lender about any seasoning rules and whether they need to see funds in your account for a set number of days.
If you plan to offer a larger deposit or accept shorter deadlines, check with your lender about appraisal timing and underwriting milestones. A clean financing path supports a stronger offer and helps you meet the contract’s dates.
Buyer checklist for Denver contracts
- Confirm who will hold funds and how you will deliver them. Get a written receipt.
- Calendar every contract deadline, including inspection, title, HOA, appraisal, and loan.
- Coordinate with your lender on documentation for the deposit and your cash to close.
- Verify all wiring instructions by phone with the escrow holder before sending funds.
- Keep copies of every notice, receipt, and email related to earnest money.
- Ask your agent to review any nonstandard clauses about release or dispute resolution.
The bottom line for Denver buyers
Earnest money shows sellers you are serious, but it should also be structured to protect you. In Denver, 1 to 2 percent of the price is a common target, with flexibility based on your price point and the level of competition. Your contract provides safeguards through contingencies and deadlines, and your escrow holder must follow Colorado rules for trust funds.
When you combine a clear strategy, tight timelines, and strong documentation, you reduce risk and increase your odds of a smooth closing. If you want one point of contact to align your offer terms, loan approval, and inspection plan, connect with UGotAGuy for a streamlined path from offer to keys.
FAQs
What is earnest money vs a down payment in Denver?
- Earnest money is a good-faith deposit credited to your down payment and closing costs at closing, while your down payment is the larger amount you bring to fund the loan and purchase.
How much earnest money should I offer on a Denver home?
- Many buyers offer 1 to 2 percent of the price, with 1,000 to 5,000 dollars common for entry-level homes and larger deposits for higher price points or competitive situations.
Who usually holds earnest money in Denver transactions?
- The contract names the holder, commonly a title company or the listing brokerage’s trust account, and these funds sit in a regulated escrow or trust account.
What happens if my mortgage is denied in Colorado?
- If your contract has a financing contingency and you act in good faith, you can typically terminate within the deadline and receive your earnest money back after providing proper notice.
Is my earnest money safe from wire fraud?
- It is protected in escrow, but wiring is a risk, so always verify instructions by phone using a trusted number and confirm receipt immediately after sending funds.
Can the seller keep my deposit if there are title or HOA issues?
- If the contract allows termination for title or HOA concerns and you follow the notice steps on time, your earnest money is typically refundable.
How soon after offer acceptance do I need to pay earnest money in Denver?
- Your contract sets the deadline, often 48 to 72 hours after acceptance, so follow the written date and delivery method and get a receipt.
Can my earnest money be a gift?
- Yes, but your lender will likely require a gift letter and documentation of the transfer, so coordinate with your lender before you send funds.
