Earnest Money in Massachusetts: What Buyers Should Know

Wondering how much earnest money you need to win a home in Boston? You are not alone. In a competitive market, the deposit you offer can signal strength, but you also want to protect those funds. This guide breaks down how earnest money works in Massachusetts, typical amounts in Greater Boston, and how contingencies safeguard your deposit so you can move forward with confidence. Let’s dive in.

What earnest money is in Massachusetts

Earnest money, also called a deposit or good-faith deposit, is money you put down when your offer is accepted to show you are serious. It is not an extra fee. Your deposit is credited toward your cash to close at settlement, which includes your down payment and closing costs.

The deposit is controlled by the purchase and sale agreement, often called the P&S. The P&S sets the amount, timing, who holds the funds, and when the deposit can be returned or forfeited. In Massachusetts, many buyers and sellers use standardized forms created by the state REALTOR association, and outcomes are determined by the written P&S terms.

Who holds the deposit

In Greater Boston, the deposit is commonly held in a broker’s trust account by the listing brokerage or in an attorney’s escrow account. A title company can also hold funds, though that is less common locally. You should receive a written receipt that shows the amount, the escrow holder, and how the funds will be applied at closing.

Typical deposit amounts in Boston

Common ranges buyers see

Nationally, buyers often put down 1 to 3 percent of the purchase price as earnest money. In Boston and Suffolk County, especially in low‑inventory or multiple‑offer situations, buyers frequently offer 3 to 5 percent to be more competitive. In less competitive settings or at lower price points, some buyers use a fixed dollar amount such as $1,000 to $5,000.

These are norms, not legal rules. What is typical can shift by neighborhood, price tier, and market cycle.

Two-step deposits are common

Many Boston buyers use a two-step structure. A small initial deposit, often a round number like $1,000, is delivered with the accepted offer. The balance needed to reach the agreed percentage follows within a short window after acceptance, often within 24 to 72 hours or a few business days as spelled out in the contract. Check your P&S for exact amounts and deadlines.

Timing and payment methods

Your offer or P&S will specify when each deposit installment is due. The initial funds are often due immediately or within 24 to 72 hours of acceptance. For larger balances, sellers and brokers usually prefer certified funds or a wire transfer, while a small initial deposit may be a personal check or electronic transfer. Always follow the escrow holder’s instructions precisely and keep copies of all receipts.

How contingencies protect your deposit

Contingencies are the contract terms that let you cancel and recover your deposit if certain conditions are not met. If a contingency is included and you follow the steps and timelines in the P&S, your earnest money is typically refundable.

Common Massachusetts contingencies

• Home inspection contingency to evaluate property condition and negotiate or walk away within a set period.
• Financing contingency that protects you if you cannot obtain a mortgage by a specified commitment date.
• Appraisal contingency, often part of the financing terms, if the appraisal is below the agreed price.
• Title contingency confirming clean, marketable title before closing.
• Condo or co-op document review for association financials and policies.
• Sale-of-home contingency, which is less common in competitive Boston markets.

Typical timelines buyers negotiate

• Inspection period: commonly 7 to 14 days.
• Mortgage commitment: often 21 to 30 days, sometimes longer for complex loans.
• Condo document review: often 7 to 14 days.

Your specific deadlines must be in the P&S. Missing a deadline can put your deposit at risk.

The risk of waiving contingencies

In fast Boston markets, some buyers consider waiving inspection, appraisal, or financing contingencies to strengthen an offer. This carries more risk for your deposit. If you waive a protection and later need to exit the deal, you may forfeit the deposit unless the seller agrees otherwise. Talk with your agent and, when appropriate, a Massachusetts real estate attorney before waiving protections.

When deposits are returned, lost, or disputed

When you can get your deposit back

• A contingency is not met and you properly cancel within the timeframe in the P&S.
• The seller cannot deliver marketable title or otherwise breaches the contract.
• Both parties sign a written mutual release to return funds.

When you could forfeit your deposit

• You back out after contingency periods expire without a contractual reason.
• You miss a contract deadline that is tied to deposit protections, such as the mortgage commitment date, without an agreed extension.
• You waived a contingency and later withdraw from the deal.

If a dispute comes up

Your P&S may outline mediation, arbitration, or court as the path to resolve disputes. In practice, many earnest money disputes are settled by negotiation between the parties’ attorneys. Keep thorough documentation, including receipts, the contract, timeline communications, and any inspection or lender letters.

Smart steps for Boston buyers

Before you make an offer

• Ask exactly where the deposit will be held and request escrow account details in writing.
• Choose a deposit amount that fits the market and your comfort with risk.
• Set realistic contingency timelines that you can meet.

When you deliver funds

• Get a written receipt with the date, amount, escrow holder, and property address.
• Use traceable funds and follow the escrow holder’s instructions carefully.
• Save bank or wire confirmations and email acknowledgments.

Protect your deposit during the deal

• Put clear contingency language and specific deadlines in your P&S.
• Start your mortgage process early to meet the commitment date.
• For condos, review association documents promptly within the review window.

If you need to be more competitive

• Consider a larger deposit within your risk tolerance.
• Pair your offer with strong pre-approval and well-calibrated contingency timelines.
• Use escalation clauses or other negotiated terms that fit your goals without overexposing your deposit.

The bottom line for Boston buyers

Your earnest money is a powerful signal and a meaningful part of your cash to close. In Greater Boston, you will often see higher deposits and tighter timelines, but the P&S contingencies and deadlines are what protect your funds. Choose an amount and a strategy that reflects the market and your comfort level, and keep every step documented.

If you want a clear plan for deposit strategy, timelines, and offer strength tailored to your target neighborhood, connect with the Christman Johnsson Group. We will walk you through each step so you can compete confidently and protect your investment.

FAQs

What is earnest money in a Massachusetts home purchase?

• It is a good-faith deposit you submit with an accepted offer that is credited toward your down payment and closing costs at settlement, not an extra fee.

How much earnest money do Boston buyers typically put down?

• In many Boston multiple-offer situations, buyers offer about 3 to 5 percent of the purchase price. In less competitive cases or lower price tiers, fixed amounts like $1,000 to $5,000 are common.

Who holds my earnest money in a Boston transaction?

• The listing broker’s trust account or an attorney’s escrow account usually holds the funds. You should receive a written receipt with the escrow details.

When is earnest money due after my offer is accepted in Massachusetts?

• The initial deposit is often due immediately or within 24 to 72 hours. A second installment to reach the agreed total may be due within a few business days as stated in your P&S.

How do contingencies protect my earnest money in Boston?

• If a contract contingency such as inspection, financing, or condo document review is included and you cancel within the set timeline, your deposit is typically refundable.

What happens if I waive contingencies to be more competitive?

• Waiving protections can strengthen your offer but increases the risk of losing your deposit if you later need to terminate without a contractual basis.

What if there is an earnest money dispute in a Massachusetts purchase?

• The P&S may call for mediation, arbitration, or court. Many disputes resolve through attorney negotiation, so keep all receipts and written communications organized.