Earnest Money In San Diego: What Buyers Should Know

Are you wondering how much earnest money you need to put down to buy a home in San Diego? You are not alone. This deposit is a key part of your offer and can help you win in a competitive market. In this guide, you will learn how earnest money works, how much is typical here, and how to protect your deposit from the moment your offer is accepted. Let’s dive in.

Earnest money basics

Earnest money is your good-faith deposit that goes in with your offer. It shows the seller you are serious and ready to perform. At closing, the deposit is usually credited toward your down payment and closing costs. If you cancel within valid contract contingencies, you typically get the deposit back. If you breach after removing contingencies, the seller may be entitled to keep it under the contract.

Where deposits are held

In California, earnest money is usually held by the escrow company named in your contract or placed in a broker’s trust account and then into escrow. These accounts follow strict California handling rules. Escrow cannot release funds without written instructions that match the purchase agreement or a legal directive.

When you must deposit

Your contract will state your deposit deadline. In practice, buyers in San Diego deliver earnest money at offer acceptance or within about 1 to 3 business days. Always follow the written deadline and keep proof of delivery, such as an escrow receipt or acknowledgment email.

How much to offer in San Diego

Typical guidance for earnest money is 1% to 3% of the purchase price. In hot or multiple-offer situations, buyers sometimes go higher to stand out. San Diego home prices are above the national average, so the dollar amount can be significant even when you use standard percentages.

Quick dollar examples

• $600,000 purchase: 1% = $6,000, 2% = $12,000
• $800,000 purchase: 1% = $8,000, 2% = $16,000
• $1,200,000 purchase: 1% = $12,000, 2% = $24,000

Fixed-dollar deposits

Some sellers prefer a round number instead of a percentage. You may see requests such as $5,000 to $20,000 for certain price points or cash offers. Your agent can advise which approach fits the property and the competition.

Contingencies and your deposit

Contingencies protect you while you verify the property and finalize financing. These are common in San Diego offers and are set by your contract.

Typical contingency timelines

• Inspection contingency: often 10 to 17 days
• Loan contingency: often 17 to 21 days
• Appraisal concerns are usually addressed during the loan window
• Title and HOA review timelines are also set in the agreement

These periods are negotiable. Shortening them can strengthen your offer but raises your risk and workload.

Refundable vs nonrefundable

Your deposit is usually refundable if you cancel within active contingency periods and follow the contract’s notice rules. Once you remove contingencies in writing, the deposit typically becomes nonrefundable. Some sellers request nonrefundable deposit language upfront, which increases your risk. Review any such terms carefully before you sign.

What happens during escrow

1. You deliver your deposit to escrow by the contract deadline.
2. You complete inspections, the lender processes your loan, and you review disclosures and documents.
3. If you cancel within a valid contingency period, you send written notice. Escrow returns your deposit per the contract.
4. If you remove contingencies and later default, the seller may claim the deposit. Escrow will hold funds until both sides agree or a legal decision is made.

Disputes and risk

Disputes usually arise over missed deadlines, unclear notices, or confusion about whether contingencies were removed. If the parties do not agree, escrow will hold the deposit until mutual instructions are provided or the dispute is resolved through mediation, arbitration, or court. In some cases, escrow may deposit the funds with the court and step out. You can manage risk by tracking dates, using clear written notices, and keeping proof of delivery.

Strategies in competitive offers

You can use your earnest money to make your offer more compelling while managing risk.

• Low-risk approach: Keep standard contingencies, offer 1% to 2% earnest money, and move quickly within the timelines.
• Balanced approach: Increase earnest money to about 2% to 3% and shorten contingency periods instead of waiving them outright.
• Aggressive approach: Some buyers raise deposits further, waive one or more contingencies, or agree to appraisal gap coverage. Only take this path if you fully understand the financial exposure.

Pair your deposit strategy with a strong pre-approval and clear proof of funds. This helps sellers trust that you will close.

Quick buyer checklist

• Put the deposit amount and delivery deadline in your offer.
• Confirm who holds the funds and request an escrow receipt.
• Calendar all contingency dates and build a plan to meet each one.
• Coordinate with your lender before shortening or waiving any contingency.
• Keep every notice in writing and save confirmation emails from escrow.

Local insight for San Diego buyers

Competitive neighborhoods and price points often see larger deposits and shorter timelines. Coastal and central areas can move fast, but inland and suburban pockets vary by season and listing quality. A targeted plan can make a big difference. Lean on local comps, active days on market, and seller priorities to decide whether to increase the deposit or adjust timelines instead.

If you want a custom offer strategy, work with a local agent who can calibrate deposit size, contingency lengths, and proof of funds for the specific home you want. That balance helps you compete while protecting your budget.

Ready to tailor an earnest money strategy to your target neighborhood and price point? Connect with Jennifer Slocum to craft a smart, competitive offer that protects your deposit and moves you closer to keys in hand.

FAQs

How much earnest money is typical in San Diego?

• Most buyers offer about 1% to 3% of the purchase price, with higher amounts in multiple-offer situations.

When do I pay the earnest money deposit in San Diego?

• Your contract sets the deadline, and it is commonly at acceptance or within 1 to 3 business days.

Who holds my earnest money during escrow in California?

• The escrow company named in your contract typically holds it, or it may start in a broker trust account and then move to escrow.

When is my deposit refundable if I cancel?

• It is usually refundable if you cancel within valid contingency periods and follow the contract’s written notice rules.

What happens if the appraisal comes in low?

• If your appraisal or loan contingency is active, you can negotiate, pay the difference, or cancel under the contingency; if waived, you assume the appraisal risk.