What is earnest money, and can I lose it?

A promise with money behind it

When a seller accepts your offer, they stop showing the house to everyone else. That's a big deal for them. Earnest money is how you say, "I'm not going anywhere."

It's still your money. At closing it comes off what you owe, so it goes toward your down payment and closing costs.

How much? That depends on the house and how many other offers are on the table. We'll decide it together when we write yours.

Where the money sits

Not in the seller's pocket. It goes into a protected account, usually with the escrow company handling your closing or with the real estate firm. Washington law makes a firm deposit it by the next banking day (unless your contract says something different) and keep it apart from the firm's own money.

One thing I tell every buyer. Before you wire anything, call the escrow company at a phone number you already trust. Wire instructions don't change by email. If an email says they did, call me.

When you get it back

Your contract gives you a few agreed ways out. The common ones are the inspection, your loan, the appraisal and the title review. Cancel for one of those reasons, before its deadline, and your deposit normally comes back to you.

How buyers lose it

• Backing out for a reason the contract doesn't cover. Cold feet after your deadlines have passed is the usual one.
• Missing a date. Each of those ways out has a clock on it. Honestly, this is the one I watch closest.
• Giving up your ways out to win the house. It can make your offer stronger. It also leaves you fewer exits, so we talk it through before you sign.

Washington puts a ceiling on this too. If your contract says the seller's only remedy is keeping your earnest money, the law limits that to five percent of the purchase price. Your contract spells out how it works for your purchase, and for legal advice an attorney is the right call.

What I do about it

I'm your REALTOR®, and I can be your loan officer too. So I'm watching your contract dates and your loan dates on the same calendar, and you hear from me before a deadline, not after. Your lender will tell you what paperwork they need for the deposit. I'll tell you what to save from day one.