How Earnest Money Works in Washington State
Earnest money is one of the most misunderstood parts of buying a home. Here's what it is, how much you need, and when you can lose it.
What earnest money is
Earnest money is a deposit you make when your offer is accepted. It shows the seller you're serious. In Washington, it's typically 1-3% of the purchase price — so $5K–$15K on a $500K home. The money goes into an escrow account managed by the title/escrow company, not directly to the seller.
When you get it back
If you back out during a contingency period (inspection, financing, appraisal), you get your earnest money back. If you back out after contingencies are removed without a valid reason, the seller can keep it. This is why understanding your contingency timelines is critical.
- Inspection contingency: typically 10 days
- Financing contingency: typically 21-30 days
- Appraisal: usually tied to financing contingency
- Title review: typically 5 days
How much is enough?
In competitive markets like Seattle, 2-3% is standard. In less competitive markets (Spokane, parts of Portland), 1-2% is common. Going higher signals stronger intent and can make your offer stand out — but only risk what you're comfortable potentially losing.
At closing
Your earnest money is applied to your down payment and closing costs. It's not an additional cost — it's an advance on what you already owe. The closing cost calculator can help you see the full picture of what you'll need at the table.