Earnest Money in Willow Glen: How It Works

Is earnest money confusing you as you plan a move in Willow Glen? You are not alone. Between deposit sizes, contingency deadlines, and escrow rules, it can feel like a lot. In a competitive neighborhood like Willow Glen, understanding how this deposit works helps you write a winning offer while protecting your money. In this guide, you will learn what earnest money is, typical local amounts, how contingencies affect refunds, and practical steps to keep your funds safe. Let’s dive in.

Earnest money, simply explained

Earnest money is a good-faith deposit you make after your offer is accepted. It shows the seller you are serious about the purchase. The funds go to an independent escrow or title company and stay there until closing or cancellation under the contract. If you close, your deposit is credited to your down payment or closing costs.

For sellers, the deposit provides security if a buyer defaults, subject to the contract and California law. The purchase agreement controls how the deposit is handled, when it is due, and what happens if either side cancels.

How it works in California

Your purchase contract, often a California Association of REALTORS form, sets the deposit amount, delivery timeline, and refund rules. Most California contracts specify delivery within 48 to 72 hours after both parties accept the offer. Always follow the exact timeline in your signed agreement.

Many contracts include a liquidated damages clause. This clause can allow a seller to keep the deposit if a buyer defaults after removing protections. Remedies and language vary, so negotiate terms that match your goals.

Contingencies control refundability. Common buyer protections include inspection, financing, appraisal, title, HOA document review, and sometimes the sale of the buyer’s current home. If you cancel within a valid contingency period, you usually receive your deposit back. If you remove contingencies and then cannot close, the seller may be entitled to the deposit per the contract.

Willow Glen norms and timing

Willow Glen is a desirable, established part of San Jose with steady demand. Strong offers often pair reputable financing with clean timelines and a confident deposit.

• Typical baseline in many markets: 1 to 3 percent of the price.
• Competitive Willow Glen and broader Bay Area practice: 2 to 5 percent is common to signal strength. In highly competitive or all-cash scenarios, buyers may go higher.
• Typical escrow length in Santa Clara County: about 21 to 30 days for conventional purchases, depending on lender and agreed terms.

Besides deposit size, sellers weigh how quickly you plan to remove contingencies, your financing strength, and your closing timeline.

Sample offer scenarios

• Competitive strength: Buyer offers 3 percent earnest money, removes inspection after 7 days, and shortens loan contingency to about 21 days. This often reads as strong.
• Buyer protection first: Buyer offers 1 percent earnest money, keeps inspection and loan contingencies for 14 and 21 days. Deposit is generally refundable if the buyer cancels within those periods.
• Higher risk: Buyer waives contingencies with a 5 percent deposit. If issues surface later and the buyer cannot close, the deposit may be at risk.

Contingencies that protect your deposit

• Inspection contingency: Cancel within the period if undisclosed issues concern you. If removed, later cancellation may put your deposit at risk.
• Financing (loan) contingency: If you cannot obtain financing in time and cancel properly, your deposit is typically refundable. Not pursuing financing can be considered a breach.
• Appraisal contingency: If the appraisal comes in low, you can cancel or renegotiate if the contract allows it. Some buyers agree to cover a gap or waive this contingency.
• Title contingency: If a title issue appears and cannot be cured within the timeframe, you can usually cancel for a refund.
• HOA documents review: For condos or townhomes, you can typically cancel within the review window if rules, fees, or disclosures do not fit your needs.
• Sale of current home: If included, this contingency needs careful timing. If not satisfied per the contract, cancellation can preserve your deposit.

How and when to deliver funds

Your contract states how and when to deliver the deposit. In California, delivery is commonly due within 48 to 72 hours of acceptance. Methods usually include wire transfer, cashier’s check, or personal check payable to the escrow holder.

Always get written confirmation from escrow that funds were received and applied to your file. Keep this receipt and any bank proof for your records.

Avoid wire fraud

Wire fraud is a real risk in real estate. Use these safeguards:

• Verify wiring instructions by calling the escrow company using a phone number you source independently. Do not rely on contact details in an email.
• Confirm the escrow account name and number with the escrow officer before sending funds.
• Send a small test wire only if permitted and practical, then confirm receipt by phone.
• Never approve last-minute wiring changes sent by email without direct verification.
• Save and compare your bank’s wire confirmation to the escrow receipt.

If a dispute arises

Most deposit disputes are resolved by a mutual release where both parties give escrow written joint instructions. If there is no agreement, the contract’s remedies apply. Some agreements require mediation or arbitration before litigation. Escrow holders will not release funds without mutual instructions or a court order.

Buyer checklist: earnest money readiness

• Get a strong pre-approval and understand loan and appraisal timelines.
• Choose a deposit amount consistent with Willow Glen norms for your price point.
• Map every contingency date and set calendar reminders.
• Confirm escrow delivery instructions by phone and keep receipts.
• Do inspections early so you can decide before deadlines.

Seller checklist: what to verify

• Deposit amount aligns with neighborhood demand and offer strength.
• Contingency periods are clear and reasonable for your goals.
• Buyer’s pre-approval or proof of funds is included and credible.
• Escrow is opened promptly and the deposit arrives on time.
• Track contingency removal dates and hold buyers to the contract.

Timeline at a glance

• Offer accepted and escrow opened.
• Earnest money delivered per contract, often within 48 to 72 hours.
• Inspection window, commonly 7 to 17 days in many markets, but negotiable.
• Appraisal and loan processes continue, with loan contingency often around 21 days depending on lender.
• HOA review for condos or townhomes.
• Contingencies removed on schedule or cancellation exercised within deadlines.
• Closing day, with earnest money credited to your final funds.

Special situations to know

• All-cash offers: Often larger deposits and shorter timelines, with greater focus on due diligence speed.
• New construction: Builder deposits and schedules can be larger and staged.
• Short sales or bank-owned: Third-party approvals can affect deadlines and deposit handling.
• Multiple buyers and funds source: Make sure names and funds documentation match what lenders and escrow require.
• Community property considerations: Spouses may need to sign. For complex cases, consult appropriate professionals.

Local guidance from our family team

Buying or selling in Willow Glen is personal. You deserve clear advice and steady communication on every deadline and dollar. Our family-led team pairs local expertise with a calm, step-by-step process so you can compete with confidence and protect your deposit along the way. If you want help sizing your deposit, structuring contingencies, or coordinating escrow, we are here to guide you.

Ready to talk through your plan? Reach out to The Chiavettas and let our family help yours.

FAQs

How much earnest money is typical in Willow Glen?

• In many markets 1 to 3 percent is common, while Willow Glen’s competitive offers often use 2 to 5 percent or more to signal strength.

When is earnest money refundable in California?

• If you cancel within valid contingency periods in your contract, you generally receive a refund, but removing contingencies before canceling can put your deposit at risk.

How fast do I need to deliver my deposit?

• Many California contracts require delivery within 48 to 72 hours after acceptance, but always follow the timeline stated in your signed agreement.

Who holds my earnest money and what happens at closing?

• An independent escrow or title company holds your funds and, at closing, applies them to your down payment and closing costs per the contract.

What if I discover issues after removing contingencies?

• If contingencies are removed and you later cancel or cannot close, the seller may be entitled to the deposit under liquidated damages or other contract remedies.

How do I avoid wire fraud with my deposit?

• Verify wiring instructions by phone using an independently sourced number for the escrow company, and obtain written confirmations for any funds sent.