Earnest Money Deposits in Santa Monica

Wondering how much earnest money you should put down on a Santa Monica home? In a coastal market where listings can move quickly, your deposit does more than hold your place. It signals strength, shapes negotiation, and carries real risk if you are not careful. In this guide, you will learn what earnest money is, what is typical in Santa Monica’s submarkets, when it is due, how refunds work, and a simple framework to choose the right amount for your offer. Let’s dive in.

What earnest money means in California

Earnest money, also called an earnest money deposit, is a good‑faith payment you deliver to escrow after your offer is accepted. It is credited to your down payment or closing costs at closing. In California, the deposit is typically held by the escrow company named in your contract and safeguarded under the escrow instructions.

Most local deals follow the California Association of Realtors Residential Purchase Agreement. The contract sets your deposit amount, contingency timelines, and how the funds are handled. Unless you and the seller agree otherwise, deposits are usually held in a non‑interest‑bearing account. If you want a quick primer, you can review the basics in this overview of earnest money.

How much earnest money in Santa Monica

Santa Monica is a high‑price coastal market inside Los Angeles County. Prices vary by neighborhood and building, and they tend to sit above many surrounding areas. For context on overall price levels, review current trends on the Santa Monica housing market page or the local home values overview.

Here are common deposit ranges you will see locally:

• Baseline in a balanced setting: 1 percent of the purchase price.
• Competitive or hot submarkets: 2 to 5 percent is common, and luxury deals can go higher.
• Entry‑level or lower‑price tiers: flat deposits around $5,000 to $25,000.
• Higher‑price listings: $50,000 to $250,000+ is not unusual because percentages translate to larger dollars.

Quick examples to set expectations:

• $1,000,000 purchase: 1 percent is $10,000; 2 to 3 percent is $20,000 to $30,000.
• $2,500,000 purchase: 1 percent is $25,000; 2 to 3 percent is $50,000 to $75,000.
• $5,000,000 purchase: 1 percent is $50,000; 2 to 3 percent is $100,000 to $150,000.

Neighborhood expectations to know

Terms vary by listing, but a few local patterns are helpful:

• Montana Avenue and North of Wilshire often ask for stronger terms in seller‑leaning moments.
• Ocean Park, Pico, and Sunset Park vary by block and condition. Updated homes and attractive condos may pull larger deposits.
• Newer luxury listings and remodeled coastal properties may prompt higher or partly non‑refundable deposits to deter competing buyers.

Market dynamics change quickly. Use these as guidelines, then calibrate to the specific listing and instructions from the seller’s agent.

When your deposit is due

Purchase agreements commonly require delivery within 2 to 3 business days after acceptance. Your agent will help you move quickly so escrow can confirm receipt.

Standard delivery options include a wire transfer to escrow, a cashier’s check, or a personal check that may take longer to clear. Many offers also use a two‑step structure, where you make a smaller initial deposit after acceptance and a larger additional deposit when you remove contingencies.

If you are financing, your lender will ask for proof that the deposit came from an acceptable source. Keep clear records and statements to avoid delays.

When you can get it back

Refundability hinges on contingencies and timing. If you cancel within an active contingency, your deposit is typically refundable. Common protections include:

• Inspection contingency, including general and pest inspections.
• Financing contingency if you cannot obtain a loan despite good‑faith efforts.
• Appraisal contingency if value comes in below the contract price.
• Title or HOA document review for condo or association issues.
• Sale of your current home if that is a stated condition.

If you remove contingencies and later cancel without a contractual reason, the seller may be entitled to keep the deposit under liquidated damages language. Missing a contingency deadline or failing to close without excuse can lead to a similar result. For a consumer‑friendly overview of deposit basics, see this plain‑English take on earnest money.

A simple framework to choose your deposit

Use this step‑by‑step approach to balance strength and safety:

1. Gauge price tier and competitiveness

• Is the listing likely to draw multiple offers, or is it sitting longer? The answer sets your deposit posture.

2. Pick your baseline percentage

• Balanced: start near 1 percent.
• Competitive: 2 to 3 percent is common; luxury or cash can go to 3 to 5 percent.

3. Adjust for your financing and contingencies

• Relying on loan or appraisal contingencies? Consider a smaller initial deposit with a larger additional deposit due at contingency removal.
• Waiving contingencies or paying cash? Expect the seller to ask for a larger deposit.

4. Convert to round numbers you can wire fast

• Use clean figures like $10,000, $25,000, $50,000. Avoid odd amounts that slow verification.

5. Match to your risk tolerance

• Prefer protection? Stay toward the lower end and strengthen your offer with price or faster timelines.
• Want maximum competitiveness? Increase the deposit or add a larger second deposit upon contingency removal.

6. Consider a two‑step structure

• Example: $10,000 at acceptance, then an additional $40,000 within three business days after loan contingency removal.

7. Align with your agent and escrow

• Confirm expectations for the specific neighborhood and make sure timelines in the offer and escrow instructions match.

Practical tips to protect your funds

• Verify wire instructions by phone using a known escrow number. Real estate wire fraud is a real risk. Review the FBI’s consumer guidance on real estate wire fraud.
• Keep documentation of your deposit source. Lenders and escrow will review it.
• Track contingency dates in writing. Formal removal of a contingency changes your refund rights.
• Be cautious with non‑refundable terms. Understand exactly when any portion becomes non‑refundable and why.
• In a backup offer, your deposit still follows the contract. It becomes active only if you move into primary position under the agreed terms.

Work with a negotiator who protects you

In Santa Monica, the right deposit can help you win without taking on avoidable risk. You deserve clear guidance on where to push, where to hold, and how to structure terms that protect your interests. If you want a local, negotiation‑led plan for your next offer, connect with Marc Robinson to schedule a confidential consultation.

FAQs

What is an earnest money deposit in Santa Monica?

• It is a good‑faith payment held by escrow after your offer is accepted, applied to your down payment or closing costs at closing.

How much earnest money is typical for a $1 million condo?

• Many buyers offer 1 to 3 percent, which is $10,000 to $30,000, with some choosing a flat amount in the $5,000 to $25,000 range.

When is earnest money due after acceptance in California?

• Most contracts call for delivery within about 2 to 3 business days, but your specific purchase agreement controls the exact timing.

Can I lose my deposit if the appraisal is low?

• If you cancel within an active appraisal contingency, the deposit is usually refundable; if you have removed it, you may not have that protection.

Is the deposit held in an interest‑bearing escrow account?

• Not by default; deposits are commonly held in a non‑interest‑bearing account unless both parties agree otherwise.

How do I avoid wire fraud when sending my deposit?

• Confirm wiring instructions directly with your escrow officer by phone using a verified number and never rely solely on email directions; review FBI guidance for best practices.