Are you about to write an offer in Lodi and wondering how the earnest money deposit works? You are not alone. This small but important piece of the contract can protect you or cost you if you miss a deadline. In the next few minutes, you will learn what earnest money is, how much buyers typically put down in Lodi, when it is refundable, and how to keep it safe from wire fraud. Let’s dive in.
What earnest money means in California
Earnest money is your initial good‑faith deposit that goes with an accepted offer. In California, most residential sales use standard forms that spell out the deposit amount, where it is held, and when it can be released. A neutral escrow or title company holds the funds in a trust account.
If the sale closes, your deposit is credited toward your down payment or closing costs. It is not the same as a lender’s escrow account for taxes and insurance. California does not usually use a separate option fee. Instead, you use contingencies to protect the deposit during your due diligence period.
Typical deposit amounts in Lodi
Deposit norms depend on the market and price point. Across California, a common range is roughly 1 percent to 3 percent of the purchase price. In the Central Valley, including Lodi, deposits often track toward the lower end compared with some coastal markets.
- On lower‑priced homes, buyers often use flat amounts, commonly about $2,500 to $10,000.
- On higher‑priced homes, 1 percent to 2 percent is common. Some buyers go higher to stand out in a competitive situation.
- Multiple offers can push deposits up, either a larger flat sum or a higher percentage.
Practical examples for context:
- On a $400,000 home, a typical deposit could be $4,000 to $8,000, and some buyers offer around $2,500 in a balanced market.
- On a $700,000 home, deposits often land between $7,000 and $21,000 depending on competition and strategy.
When your deposit is due
Your purchase agreement sets the due date. In many Lodi contracts, buyers deliver the deposit within 24 to 72 hours after seller acceptance. You can negotiate a specific deadline, such as two business days. Plan ahead so you can move funds quickly, since a late deposit can weaken your position or put you in default.
How to pay and keep it safe
Escrow or title will give you written instructions on how to deliver funds. Common methods include a wire transfer, a cashier’s check, a personal check, or an approved electronic transfer.
- Verify wiring details using a known phone number for the escrow or title company. Wire fraud is a real risk in real estate.
- Do not rely on emailed instructions alone. Call to confirm routing and account numbers before sending funds.
- Avoid cash. Escrow will log receipt and hold your deposit in a trust account until it is applied or released per the contract.
Contingencies and your deposit
Contingencies are your built‑in protections. They give you time to investigate the property and financing. If you cancel within the agreed timelines and follow the contract’s notice rules, your deposit is typically refundable.
Common contingencies include:
- Inspection. You can inspect and, if needed, cancel within the inspection period.
- Loan. If you cannot obtain loan approval per the contract terms and you act within the deadline, your deposit is usually returned.
- Appraisal. If the appraisal comes in low, you can negotiate, pay the difference, or cancel per the contract terms and timelines.
- Title. Unresolved title issues can be grounds to cancel and receive a refund.
When deposits become non‑refundable
Each contingency has a deadline and removal process. If you remove a contingency, then do not close for a reason not allowed by the contract, the seller may seek to keep your deposit as liquidated damages, subject to the contract and California law.
Lenders count your deposit toward funds to close. Be ready to document where it came from. Large or unexplained bank deposits can slow underwriting, so share source details early.
What happens at closing or cancellation
If the sale closes, escrow applies your earnest money to your down payment or closing costs and then disburses funds per the final settlement statement.
If you cancel under an agreed contingency, escrow returns your deposit after receiving the required signed instructions from both parties. If there is a dispute about who should get the deposit, escrow holds the funds until the parties agree in writing or a mediation, arbitration, or court decides.
If there is a dispute
Escrow will not decide who is right on its own. If buyers and sellers cannot agree on a release, escrow can hold the money until there is a mutual instruction or a legal decision. Standard contracts often include steps for mediation and arbitration. This process can take time, so clear communication and timely notices are important.
Buyer checklist for Lodi
Use this quick list to avoid common pitfalls and strengthen your offer.
- Get a strong pre‑approval before you write.
- Ask your agent what deposit levels are typical for recent Lodi sales at your price point.
- Write a clear deposit amount and due date into the offer.
- Verify the escrow company and wiring details in advance, then confirm by phone before sending funds.
- Track your inspection, loan, appraisal, and title deadlines in writing. Send notices on time.
- Keep lender documentation handy, including bank statements and gift letters if applicable.
- Do not remove contingencies until issues are resolved to your satisfaction.
- Consider other ways to strengthen your offer, such as shorter contingency periods or price terms, and weigh the deposit risk carefully.
Final word
Your earnest money deposit is a signal of commitment and a key part of your offer strategy in Lodi. With the right amount, clear timelines, and careful protection of your funds, you can write a confident offer and keep your deposit safe. If you want help tailoring your deposit strategy to a specific home or market conditions, we are here to guide you.
Ready to plan your next move in Lodi or the Central Valley? Reach out to Alex Levy for a boutique, white‑glove consultation and a clear path to the closing table.
FAQs
How earnest money works in Lodi offers
- Earnest money is a good‑faith deposit held by escrow or title that applies to your down payment or closing costs at closing.
Typical earnest money amounts for Lodi homes
- Many buyers use $2,500 to $10,000 on lower‑priced homes or 1 percent to 2 percent on higher‑priced homes, with higher deposits in competitive situations.
When the earnest money deposit is due after acceptance
- Most contracts call for delivery within 24 to 72 hours after the seller accepts your offer, or by a specific business‑day deadline.
When earnest money is refundable for Lodi buyers
- If you cancel within your inspection, loan, appraisal, or title contingency timelines and follow notice rules, the deposit is typically returned.
How to protect your deposit from wire fraud
- Confirm wiring instructions by calling a verified phone number for the escrow or title company and never rely on emailed changes alone.
What happens to earnest money if the loan is denied
- If you timely cancel under the loan contingency, the deposit is usually refunded. If your loan falls through after you remove contingencies, the deposit may be at risk.
