Are you wondering how much earnest money you should put down in Sonoma County, and what happens to it if things change? You are not alone. The deposit is a key part of your offer, and it can either protect you or add risk depending on the terms. In this guide, you will learn what earnest money is, typical ranges here in Wine Country, when it is refundable, and how to use it to strengthen your offer without overexposing yourself. Let’s dive in.
Earnest money basics
Earnest money is a good-faith deposit you provide after a seller accepts your offer. It shows you are serious and holds the home for you while you complete due diligence. In California, the deposit and your rights are defined by the purchase agreement, often the California Association of REALTORS Residential Purchase Agreement. If the sale closes, the deposit is usually credited to your closing costs or down payment.
How funds are held
Your deposit is typically delivered to an escrow or title company and placed in a trust account. Escrow will follow the written instructions in the contract and will only release funds based on those instructions, mutual written consent, or a court order. The money does not go directly to the seller during escrow.
Timing and deposits
Most offers specify an initial deposit due within a short window after acceptance, often within 1 to 3 business days. Some contracts include a further deposit later in the process. Timing is negotiable, but once agreed in the contract, those deadlines matter.
Typical amounts in Sonoma County
There is no one-size number. A common guideline in California is about 1 to 3 percent of the purchase price, though some offers use a flat dollar amount. In less competitive situations, smaller deposits can work. In multiple-offer situations, larger deposits often signal strength.
What influences deposit size
- Submarket and price tier: Expectations in Santa Rosa may differ from Healdsburg or Sebastopol. Entry-level homes in popular neighborhoods can see stronger terms.
- Property type: Rural or higher-end properties may involve added due diligence on septic, wells, or wildfire exposure, which can shape deposit and contingency strategy.
- Market momentum: In a seller-leaning market, buyers may increase deposits. In a slower market, smaller deposits are more common.
When deposits are refundable
Deposits are usually refundable if you cancel within the contract’s contingency periods and follow the required steps and timelines. The key is to act in writing and on time.
Contingencies that protect you
- Financing: If your loan is denied or cannot be obtained within the financing contingency period, you can typically cancel and get the deposit back.
- Appraisal: If the appraisal is below the contract price and you cancel under the appraisal contingency, the deposit usually returns.
- Inspections: If inspections reveal issues and you cancel within the inspection period, the deposit is typically refundable.
- Disclosures and title: If disclosures, HOA documents, title, or other feasibility items are unsatisfactory and you cancel as allowed, you are usually protected.
- Home sale: If your purchase is contingent on the sale of your current home and that condition is not met, the deposit may be refundable under the contract.
When your deposit is at risk
If you remove contingencies in writing, or let a contingency period lapse without canceling, you generally lose the right to a refund based on that contingency. If you walk away without a contractual right after removing contingencies, the seller may be entitled to keep the deposit under the contract’s remedies, which can include a liquidated damages clause. If there is a dispute, escrow will typically hold the funds until both sides agree or a dispute resolution path is completed.
Sonoma-specific factors
Wildfire and insurance
Some Sonoma County properties are in higher wildfire risk areas. Use your contingency periods to confirm insurability and premiums with your insurance provider. If the contract or disclosures include an insurability contingency and you cannot secure coverage, that can be a legitimate reason to cancel and recover your deposit.
Septic, wells, and rural due diligence
Many Wine Country properties rely on private septic systems and wells. Build time into your inspection period for specialized inspections and reports. Your deposit strategy should reflect the added complexity and the need for thorough due diligence on rural parcels.
Submarket competitiveness
Demand varies by town and season. Entry-level homes in popular neighborhoods may see multiple offers. Vineyard-adjacent or estate properties can have longer timelines due to specialized inspections and documents. Tailor deposit size and contingency windows to the property and the current level of competition.
Offer strategy for Sonoma buyers
Ways to strengthen your offer
- Increase the deposit within your risk tolerance to signal commitment.
- Keep your contract clean and complete, with proof of funds or a strong pre-approval.
- Shorten contingency periods only if you can realistically meet them.
- Match your timelines to local realities, including inspector availability and lender milestones.
Balance strength and safety
A larger deposit can stand out, but it raises your exposure once contingencies are removed. Never remove protections without understanding the financial risk. If you are relocating and cannot attend inspections, build in contingency windows that allow for remote scheduling and review.
Hypothetical examples
- Example A - suburban purchase around $700,000: You offer $700,000 with a 1 percent deposit of $7,000, due to escrow within the agreed window. You include financing, appraisal, and inspection contingencies. Your deposit is typically refundable if financing falls through within the contingency period.
- Example B - multiple offers on an entry-level home: You offer $740,000 with a 2.5 percent deposit of $18,500 and shorter contingency periods to compete. If you remove contingencies and later cannot close, your deposit may be at risk.
- Example C - rural property with septic and well: You provide a smaller initial deposit and keep a wider inspection contingency while specialists complete septic and well tests. You can adjust the deposit or timelines as inspections progress.
Escrow steps and best practices
- Identify the escrow company in your offer and confirm deposit instructions in writing.
- Send the funds within the contract’s deadline and request a written receipt showing deposit to the trust account.
- Track contingency dates on a shared calendar and keep copies of all notices for contingency removal or cancellation. Timely written communication is essential to preserve your rights.
Your next step
A thoughtful deposit strategy can help you win the right property while protecting your interests. If you want guidance tailored to a specific neighborhood, price band, or property type in Sonoma County, reach out to the Berg Group for a clear plan that fits your goals.
FAQs
How much earnest money is typical in Sonoma County?
- Many offers fall around 1 to 3 percent of the price, or a few thousand dollars, depending on the property and competition. Your agent can calibrate the number to current local norms.
Will I lose my deposit if my loan is denied?
- If you have a financing contingency and you cancel within the contract’s timeline and procedures, the deposit is typically refundable.
Can I get my deposit back after inspection issues?
- Yes, if you cancel within the inspection contingency period under the contract. After you remove the inspection contingency, it is harder to recover the deposit.
How fast do I need to deposit earnest money?
- Contracts commonly call for delivery within 1 to 3 business days after acceptance, but exact timing is whatever you agree to in the purchase contract.
What if the seller refuses to release the deposit?
- Escrow usually holds the funds until both parties agree or a dispute resolution process, such as mediation, arbitration, or a court order, decides the outcome.
What if I cannot get homeowners insurance due to wildfire risk?
- If insurability is included as a contingency and you cannot secure coverage, you may be able to cancel and recover your deposit within the contract terms.
