Buying in Boston moves fast, and the earnest money conversation can feel like a high-stakes moment. You want a strong offer that sellers respect without putting your cash at unnecessary risk. In this guide, you will learn exactly how deposits work in Boston and Suffolk County, what amounts are typical, how contingencies protect you, and how to avoid common pitfalls. Let’s dive in.
Earnest money basics
Earnest money is your good-faith deposit that shows you are serious about buying a home. It is not an extra fee. If the sale closes, your deposit is usually credited toward your purchase price or closing costs.
This deposit helps reduce a seller’s risk while both sides work through contingencies and move toward closing. In Boston, you typically submit it when you make an offer or when you sign the Purchase and Sale (P&S) agreement.
Who holds your deposit in Boston
In Massachusetts, earnest money is usually kept in a neutral trust or escrow account until closing or resolution. The P&S should name the holder clearly. Common holders include:
- The listing broker’s client trust account
- A buyer’s or seller’s attorney trust (escrow) account
- A title or closing agent’s escrow account
Licensed brokers and attorneys must follow strict trust-account rules. Funds are kept separate from operating money and can only be released as allowed by the contract, mutual agreement, or a court order. Always request a written receipt that shows the amount, date, who paid, and who holds the funds.
When funds are released
- If the sale closes, your deposit is applied to your purchase funds at closing.
- If you cancel within a valid contingency window, the deposit is returned based on the terms in your P&S.
- If you default after contingencies are satisfied, the seller may keep the deposit as liquidated damages or pursue other remedies, depending on the contract.
Typical deposit amounts in Boston
There is no state-mandated amount. Local practice and market conditions drive what is customary. In Boston:
- Modestly competitive or lower-priced condos may see deposits around a flat $1,000 to $5,000.
- Standard residential offers often target roughly 1 percent of the purchase price, though many Boston offers land somewhere in the range of several thousand dollars up to 1 to 3 percent.
- Highly competitive or luxury listings may call for larger deposits to show stronger commitment.
Your strategy should reflect the property type, price point, and how competitive the neighborhood is. Back Bay, South End, Seaport, Allston, Jamaica Plain, Dorchester, and Charlestown can each behave differently.
What drives deposit size up or down
- Market competitiveness and multiple-offer scenarios
- Price point and property type, such as condo versus single-family or multi-family
- Your contingency strategy and risk tolerance
- Seller preferences stated in the listing
- Whether you are a cash or financed buyer
- Local custom and guidance from your agent and attorney
Contingencies that protect your deposit
Contingencies outline when you can cancel and keep your deposit. Common ones include:
- Home inspection: Cancel or renegotiate within the inspection window if issues arise, based on your contract terms.
- Financing or mortgage: If you cannot obtain financing by the deadline despite following the process, you may cancel and recover the deposit.
- Appraisal: If the appraisal is low and you cannot bridge the gap or renegotiate, this may allow termination and refund.
- Title: If title issues cannot be resolved, you may terminate and get your deposit back.
- Other: Condo documents review, lead paint, or required municipal checks.
Read your P&S carefully. It should define which contingencies apply, the deadlines, and the exact steps to terminate properly for a refund.
When your deposit becomes non-refundable
Your deposit is at greater risk after you waive contingencies or miss a deadline without properly terminating. Many P&S agreements include liquidated damages language stating the seller can keep the deposit if you default. Others allow the seller to seek additional damages. Clear timelines and written notices matter.
Common dispute outcomes
- Valid contingency termination leads to a refund.
- If you breach after contingencies expire, the seller may keep the deposit or seek damages based on the contract.
- Parties can agree to split or release funds by mutual written agreement.
- If there is a dispute, the escrow holder can keep funds in trust until the parties agree or a court or mediator orders release.
How to avoid deposit disputes
- Get a written receipt for your deposit and confirm who holds it.
- Make sure the P&S states the escrow holder, contingency terms, deadlines, and default remedies.
- Keep proof of sending funds, such as wire or bank confirmations.
- Put all contingency waivers or removals in writing per the P&S.
These steps help create a clean paper trail if questions arise.
Make a stronger offer without overexposing risk
A larger deposit can make your offer more compelling, especially in a multiple-offer situation. You can balance strength and protection with these moves:
- Pair your deposit with a strong pre-approval and proof of funds.
- Consider shorter, realistic contingency timelines rather than waiving protections.
- Discuss advanced tactics with your agent and attorney, such as an escalation clause or an appraisal gap commitment, if appropriate for your goals and risk tolerance.
Money logistics for Boston buyers
Plan your cash flow early so you can move quickly and securely:
- Keep deposit funds in a liquid account with verified access.
- Expect to provide proof of funds for the deposit and the down payment.
- Confirm wiring instructions by phone with known contacts to avoid fraud. Do not rely on email-only changes.
- Ask in advance if the deposit will be held by the listing broker, an attorney, or a title company, and request a receipt.
Who to involve early
- Buyer’s agent: Helps you set the deposit amount, structure contingencies, and match local norms by neighborhood.
- Mortgage lender: Confirms realistic financing timelines for your contingency.
- Real estate attorney: Reviews your P&S, escrow language, and protections so your deposit and rights are clear.
A simple plan for your next offer
- Secure a current pre-approval that matches your price range.
- Speak with a Boston real estate attorney about the P&S and escrow details.
- Ask your agent about deposit norms in your target neighborhoods.
- Prepare liquid funds and know your wire process. Keep all receipts and confirmations.
- Review your P&S for the escrow holder, contingency deadlines, and what happens if you terminate or default.
Buying in Boston rewards preparation. When you understand the purpose of earnest money, where it is held, how contingencies work, and the steps to document everything, you can write a confident offer and protect your interests. If you would like tailored guidance for your search and strategy, connect with the team at Cheryl Zarella.
FAQs
What is earnest money for Boston home purchases?
- It is a good-faith deposit you make with your offer or at the P&S stage, held in escrow and usually credited to your price or closing costs at closing.
Who holds earnest money in Massachusetts transactions?
- The listing broker, a real estate attorney, or a title/closing agent typically holds funds in a trust or escrow account named in the P&S.
How much earnest money do Boston sellers expect?
- It varies by property and competition, ranging from a flat few thousand dollars to roughly 1 to 3 percent, with higher amounts in luxury or multiple-offer situations.
Can I get my deposit back after a failed inspection in Boston?
- If your P&S includes an inspection contingency and you terminate within the deadline following the contract steps, the deposit is typically refunded.
What happens to earnest money if the appraisal comes in low?
- With an appraisal contingency, you can usually cancel and receive your deposit if you cannot renegotiate or cover the gap. If waived, your risk increases.
When does earnest money become non-refundable in Suffolk County?
- After you waive contingencies or miss deadlines without terminating properly, your deposit may be non-refundable under the P&S terms.
How do I protect my deposit from fraud and errors?
- Keep funds in a liquid account, confirm wiring instructions by phone with known contacts, and save all receipts and confirmations for a clear paper trail.
