Earnest Money in Maryland: How It Works

Are you wondering how much earnest money you should offer in Maryland and what happens to it if plans change? You are not alone. This deposit can shape your offer’s strength and your financial risk, so it pays to understand the rules before you write a check. In this guide, you’ll learn how earnest money works in Maryland, typical amounts, key deadlines, and how to protect your funds from offer to closing. Let’s dive in.

Earnest money basics in Maryland

Earnest money is a good‑faith deposit you make when you go under contract to buy a home. It shows the seller you are serious and helps bind the agreement. The amount, timeline, and what happens to the deposit are set by the written purchase contract.

In Maryland, your deposit is usually held in a brokerage trust or escrow account, or with a title company named in the contract. Brokers must follow state real estate commission rules for handling client funds, which keep these deposits separate from operating accounts. If a dispute comes up later, you and the seller will follow the contract and any dispute procedures it outlines. If you face a complex dispute, talk with your agent and consider attorney guidance.

How much should you offer?

There is no one rule for deposit size in Maryland. Amounts vary by market, price point, and how competitive your offer needs to be.

Common patterns across Maryland include:

• Lower‑priced or less‑competitive markets: fixed deposits of roughly $500 to $5,000.
• Mid to higher‑priced markets: amounts often set as a percentage, commonly 1% to 3% of the purchase price.
• Highly competitive or luxury segments: larger deposits and faster delivery can help your offer stand out.

What drives the amount:

• Price point. A flat $5,000 means more on a $200,000 home than on a $1 million purchase.
• Market conditions. In a seller’s market, larger deposits can signal stronger commitment.
• Loan and appraisal risk. Bigger down payments or cash can support larger deposits. Low‑down‑payment loans or more contingencies may pair with smaller deposits.
• Contingencies. If you keep more protections, some sellers ask for a higher deposit in return.

General examples buyers often see in Maryland:

• Typical suburban single‑family home: around 1% of the price, but it varies.
• Urban or high‑demand areas like parts of Montgomery County or popular Baltimore neighborhoods: 2% to 3% or more.
• Entry‑level or modest purchases: $1,000 to $3,000 is common when the market is balanced.

Local customs shift with supply and demand. Before you write an offer, ask your agent to confirm norms in the specific neighborhood and price band.

When you deliver the deposit

Your contract sets the delivery deadline. Typical timing includes:

• With the offer. Some buyers submit a check or provide proof of funds when they submit.
• After ratification. Many contracts call for delivery within 1 to 3 business days after both sides sign.
• Where it goes. Funds are deposited into a broker’s trust account or a title company’s escrow, as named in the contract.

Best practice: deliver promptly and get a receipt. Timely delivery reduces risk of a contract dispute about whether you met the deadline.

Key milestones and common contingencies

Maryland contracts use clear timelines for due diligence and financing. Your rights to a refund often depend on meeting these deadlines.

• Inspection or due‑diligence period: often 7 to 14 days. You can inspect the home, get estimates, review HOA or condo documents, and order surveys.
• Financing contingency and loan commitment: often 21 to 45 days. Many conventional loans close in 30 to 45 days, but timing depends on lender and program.
• Appraisal contingency: tied to your lender’s timeline. Appraisals are often ordered within the first 1 to 3 weeks after loan application.
• Title and closing: the title company researches and clears title issues before settlement. Contract language explains your rights if problems arise.

How these affect your deposit:

• If you end the contract within a valid contingency period, and you give proper written notice on time, you typically receive your earnest money back.
• If you miss a deadline or do not follow the contract’s notice steps, you may lose the right to a refund. Sellers can seek to keep the deposit or pursue other remedies based on the contract.

Tip: set calendar reminders for each deadline on day one. Share the dates with your lender and agent so everyone stays aligned.

Refunds, defaults, and disputes

Most outcomes come down to what your contract says and whether you follow it on time.

• Buyer cancels within a valid contingency. If you exercise the contingency correctly and on time, your deposit is usually refunded.
• Buyer misses deadlines. If you fail to remove a contingency or miss a notice date, the seller may be able to claim the deposit as damages, depending on the contract.
• Buyer breach outside contingencies. If you default without a contractual out, the contract may treat the deposit as liquidated damages or allow the seller to pursue other remedies.
• Seller default. If the seller will not perform, you can usually recover your deposit and may have other remedies available.

How disputes are handled:

• Mutual release. Many contracts call for a written agreement by both parties that authorizes disbursement of funds.
• Escrow hold. If you cannot agree, the escrow holder often keeps funds in trust until you resolve the matter.
• Interpleader, mediation, or arbitration. If required by the contract, the escrow holder can ask a court to decide or the parties may use alternative dispute resolution.

Clauses to know:

• Liquidated damages. Some contracts limit a seller’s remedy to the deposit amount if the buyer breaches.
• Time is of the essence. This language makes deadlines strict. Missing a date can trigger default risk.

Maryland vs nearby markets

Practices in Maryland align with national norms. Deposits are governed by the contract, held in escrow, and refunded or forfeited according to the agreement.

• Maryland and DC metro areas. Parts of Montgomery and Prince George’s counties can feel as competitive as DC or Northern Virginia. Offers may include larger deposits or faster delivery in hot segments.
• Northern Virginia and DC. Some submarkets lean toward higher percentages and deposit-with-offer customs when competition spikes. High‑demand Maryland neighborhoods can mirror that pattern.
• Pennsylvania. Southeastern Pennsylvania shows similar patterns, though counties vary between flat dollar deposits and percentage norms.

If you are relocating across state lines, confirm local customs and timelines for each contract form. Do not assume the same rules apply everywhere.

Smart risk management for buyers

You can strengthen your offer while keeping your deposit safer by planning ahead.

• Clarify the amount and delivery method before you offer. Decide whether you will provide a check or wire to the named escrow holder.
• Insist on written contingency periods and notice steps. Make sure timelines are on the calendar, and keep proof of any notices you send.
• Coordinate with your lender on appraisal and commitment timing so you meet financing deadlines.
• Confirm wire instructions by phone using a known, verified number. Do not trust email alone. Watch for last‑minute changes and confirm them in person or by verified call.
• Choose a deposit size that aligns with your comfort level and risk tolerance in case of breach.

Smart risk management for sellers

You can use earnest money to gauge buyer commitment and reduce risk.

• Ask for a deposit that fits the price point and market. In competitive segments, higher deposits are common.
• Require timely delivery. Confirm who holds the funds, and get proof of receipt.
• Keep the contract’s timelines clear. If you accept contingencies, track each deadline.
• Know your remedies. Review clauses on liquidated damages and dispute resolution so you understand your options if the buyer defaults.

Who holds the money and why it matters

Your contract should name the escrow holder, often a broker or title company. This matters because release procedures vary.

• Brokers and title companies have duty‑of‑care obligations and follow written instructions to disburse funds.
• If a dispute arises, escrow holders often require a mutual release or a court order before releasing funds.
• Ask your agent to explain the escrow process before you wire or deliver any money.

Real‑world examples

Here are simple scenarios to help you picture outcomes. These are general examples, not rules.

• Balanced market, entry‑level townhome. You offer $2,500 on a $350,000 home with inspection and financing contingencies. You terminate within the inspection period due to repair costs. You provide written notice on time. Your deposit is refunded.
• Competitive suburban single‑family. On a $900,000 home with multiple offers, you provide a 2% deposit and shorten inspection to 7 days. Your financing is delayed, and you miss the financing deadline. The seller declines to extend. You risk losing the deposit if you cannot close, depending on the contract’s remedies.
• Seller default. You meet all deadlines, but the seller refuses to convey. Your deposit is returned, and you may have additional remedies based on the contract.

Work with a local guide you trust

You deserve clear advice, organized timelines, and strong advocacy from offer to closing. Our team supports first‑time buyers, relocating and military families, and move‑up clients across Maryland and the greater DC metro. We help you right‑size your deposit, set realistic timelines, and protect your interests at each step.

Ready to talk strategy for your next Maryland purchase or sale? Connect with ONE Residential to get started.

FAQs

Is earnest money the same as a down payment in Maryland?

• No. Earnest money is a deposit that is applied to your closing costs or down payment at settlement. Your down payment is the larger amount you bring to closing to fund the loan and purchase.

How much earnest money is typical in Maryland right now?

• Amounts vary by market. Lower‑priced or balanced areas often see $500 to $5,000, while mid to higher‑priced markets often use 1% to 3% of the purchase price. Competitive segments may go higher.

When is earnest money due after my offer is accepted?

• Many contracts call for delivery within 1 to 3 business days after ratification, or with the offer if negotiated. Your contract controls the exact timing and the escrow holder.

Can a seller keep my deposit if I back out without a valid reason?

• Yes, possibly. If you cancel outside of your contingencies or miss a notice deadline, the seller may seek to keep the deposit under the contract’s remedies. Outcomes depend on the agreement and facts.

What happens if my mortgage is denied?

• If you have a valid financing contingency and you follow the notice steps on time, the deposit is typically returned. Without a valid contingency or proper notice, the seller may have recourse under the contract.

Who usually holds earnest money in Maryland?

• Either a broker’s trust account or a title company’s escrow account. The contract should name the escrow holder and outline disbursement procedures.

How can I make my offer more competitive without risking my deposit?

• Consider increasing the deposit amount, tightening timelines you are comfortable meeting, and keeping the offer clean on nonessential items. Remember that reducing contingencies increases risk, so weigh tradeoffs with your agent.