Staring at a blank offer form and wondering how much earnest money to put down? You are not alone. In Denver’s fast-moving market, your deposit can strengthen your offer and still stay protected if you set up the contract correctly. In this guide, you will learn what earnest money is in Colorado, typical deposit amounts around Denver, when it is refundable, and how to safeguard it with clear contingencies and timelines. Let’s dive in.
What earnest money means in Colorado
Earnest money is a good‑faith deposit you submit after your offer is accepted. It shows the seller you are serious and is held in escrow until closing. At closing, it is usually credited toward your down payment and closing costs unless the contract states otherwise.
A neutral third party holds the funds. In Colorado that is typically a title company, or sometimes a listing brokerage’s trust account. The escrow holder follows the written instructions in your contract.
Earnest money is not your down payment. The down payment is paid at closing. Colorado buyers pay a separate fee for inspections. And, standard contract contingencies control your right to inspect and to terminate.
Many Colorado residential contracts allow the parties to agree that the seller can keep the earnest money as liquidated damages if the buyer defaults. Always review the actual contract you sign so you understand remedies and timelines. I've been at this for over 33 years and only had a buyer forfeit their earnest money 2X in almost 1000 personal transactions and the reason was they didn't close for various personal reasons.
How much to deposit in Denver
Most Denver metro offers fall in the range of 2,000 to 10,000 dollars, or about 1 percent of the purchase price as a simple benchmark. For higher‑priced homes or competitive situations, 1 to 3 percent is common. In lower‑competition segments, deposits can be 1,000 to 5,000 dollars.
A few quick examples help with the math:
- 400,000 dollar home → 1 percent is 4,000 dollars.
- 600,000 dollar home → 1 percent is 6,000 dollars; 2 percent is 12,000 dollars.
Your number should reflect price tier, competition, and your risk tolerance. When multiple offers are common, a larger deposit can help signal commitment. When days on market are longer, a smaller deposit may be acceptable. Market dynamics shift, so ask your agent for recent neighborhood examples before you choose your amount.
When your deposit is refundable
Your earnest money is generally refundable during active, valid contingency periods if you terminate exactly as the contract allows. Typical Colorado contingencies include:
- Inspection and due diligence
- Financing or mortgage commitment
- Appraisal
- Title review
- HOA document review for condos or townhomes, and a few more.
If a contingency is not satisfied and you deliver a timely termination notice per the contract, you are usually entitled to the return of your deposit. Keep the calendar front and center. Refundability follows the contingency windows, not just the closing date. My TC assists you in that capacity too.
When your deposit is at risk
Your earnest money can be at risk if you remove or waive contingencies and later terminate without the seller breaching the contract. Missing contract deadlines can also change a refundable deposit into funds the seller can claim.
If you fail to close without a contractual termination right, the seller may seek the earnest money as liquidated damages, depending on your contract. If either side disputes the release, the escrow holder will follow the written instructions in the contract or hold funds until both parties agree or a court orders release or interpleading.
Key timelines to track
Your contract will set the deposit deadline. Industry practice is often 1 to 3 business days after acceptance. Deliver funds on time to the escrow holder named in the contract will provide you and me written proof of receipt.
Contingency dates control your protection. You will see separate deadlines for inspection, appraisal, financing, title, and HOA review and more. Each deadline governs if and when you can terminate and keep your deposit. The closing date and any cure periods also matter. Missing them can trigger default provisions.
A quick checklist helps you stay on track:
- Verify the escrow holder and deposit deadline the day your offer is accepted.
- Fund by wire or cashier’s check per escrow instructions and keep the receipt.
- Call the title company to confirm wiring instructions to prevent fraud.
- Calendar every contingency date and the time of day notices are due.
- Deliver all notices in writing by the method required in the contract.
- WE monitor every date in the contract for you so you don't miss one!!!
How to protect your earnest money
You can structure your offer and your process to reduce risk while staying competitive.
- Set clear contingencies. Include inspection, financing, appraisal, and title or HOA review with specific, time‑limited deadlines. Plan enough time for inspections and lender underwriting.
- Manage inspections. Order inspections immediately and submit repair requests or termination within the inspection window. If you proceed after discovering defects, your deposit may no longer be refundable under that contingency.
- Coordinate financing early. Align your deposit with a strong pre‑approval and clear communication with your lender. Remember, the lender does not hold your deposit. Title or escrow does.
- Understand appraisal gaps. If you agree to cover an appraisal shortfall or remove the appraisal contingency, be sure you can close even if the appraisal comes in low.
- Use precise termination steps. If you need to exit, follow the contract’s notice requirements to the letter and request a mutual release to expedite return of funds.
- Consider counsel for complex terms. Large non‑refundable deposits, waived contingencies, or custom remedies are reasons to consult a Colorado real estate attorney.
Denver buyer scenarios
- Competitive single‑family home. You are offering on a well‑priced home with multiple bids. A 1.5 to 2 percent deposit with tight but realistic inspection and appraisal timelines can show strength without giving up protection.
- Urban condo with longer days on market. You are offering on a condo that has been listed for several weeks. A deposit around 1 percent with standard contingencies may be acceptable.
- Cash buyer on a luxury property. You want to stand out. A larger flat sum or 2 to 3 percent deposit with limited, clearly defined contingencies can signal certainty, while you still maintain critical protections.
These are illustrations. Your exact approach should match the property, competition, and your financial comfort.
Common mistakes to avoid
- Depositing late or to the wrong account. Always confirm the named escrow holder and deposit deadline, and verify wire instructions directly with the title company. (WE have specific rules we follow communicating with the title company)
- Confusing deposit deadlines with contingency deadlines.
If you want a disciplined plan tailored to your price point and neighborhood, connect with Mark Cooper for a private consultation.
