How much should you put down as earnest money on a Royal Oak home, and how do you keep it safe? If you are buying in Oakland County, this part of the offer can help you stand out while protecting your budget. In this guide, you will learn typical local amounts, how refund rules work, and the exact steps to follow so your deposit is handled the right way. Let’s dive in.
What earnest money is
Earnest money, also called an earnest money deposit, is a good‑faith deposit you make after your offer is accepted. It shows the seller you intend to close. If the sale goes through, the deposit is credited to your down payment or closing costs at the closing table.
In Michigan, the purchase agreement controls how your earnest money is handled. The agreement sets who holds the funds, when you must deliver them, what contingencies protect you, and how disputes are resolved. In Oakland County, a neutral title or settlement company usually holds the funds in escrow.
Typical Royal Oak amounts
There is no fixed rule that sets the amount. Local practice gives you flexible options based on price and competition.
- For many single‑family homes, buyers often offer between 1,000 and 5,000 dollars.
- A common guideline is about 1 percent of the purchase price.
- In competitive situations, buyers may go higher, often 2 to 5 percent of the price, to signal strong intent.
Price point matters. Lower‑priced homes may see flat deposits, such as 1,000 to 2,500 dollars. Higher‑priced homes often use a percentage, such as 1 to 3 percent. The right amount depends on your comfort level, the specific property, and how many buyers are competing.
How refundability works
Whether your earnest money is refundable comes down to the contract and deadlines. Most buyers protect their deposit with contingencies.
- Inspection contingency. You can cancel and recover your deposit if you find unacceptable issues and give proper written notice within the inspection period.
- Financing contingency. If your lender does not approve your mortgage and you follow the contract timelines, you can usually recover your deposit.
- Appraisal contingency. If the appraisal is below the purchase price and the seller will not adjust, you can cancel within the agreed period and recover your deposit.
- Title contingency. If there are title problems that are not cured within the timeframe, you can object and cancel per the contract.
To keep refund rights, you must act in writing before each deadline. If you miss a deadline and then cancel, you risk forfeiting the deposit. If you change your mind after contingencies expire, the seller may be entitled to the deposit under the agreement.
Timelines and process
Here is the typical flow for Royal Oak buyers:
- Offer submitted. Your offer states the earnest money amount and names the escrow or title company that will hold the funds.
- Offer accepted. The contract sets your deposit deadline. Local practice is often 24 to 72 business hours after acceptance, unless the agreement says otherwise.
- Escrow acknowledgment. After you deliver funds, request a written earnest money receipt showing the amount and the date received.
- Contingency periods. Funds stay in escrow while you complete inspections, loan approval, appraisal, and title review.
- Closing or release. At closing, the deposit is applied to your costs. If the deal does not close, the escrow holder releases funds per a mutual written release or per the dispute process stated in the contract.
Who holds the deposit
In Oakland County, a neutral escrow holder handles earnest money. This is usually a title company or settlement provider. The contract will name the holder and provide instructions for deposit and release. You should not hand funds directly to the seller. If there is a disagreement, the escrow holder keeps the funds until both parties sign a release or a court, mediation, or arbitration decides.
Protect your deposit
You can make a strong offer without taking on extra risk. Use these strategies to balance appeal and protection.
- Right-size the deposit. In a calm market, a modest deposit can be enough. In a bidding war, consider increasing the amount to show seriousness, while keeping key protections.
- Keep critical contingencies. Shorten your inspection period rather than waiving inspection. Set realistic financing and appraisal timelines.
- Show financial readiness. Provide proof of funds and a pre‑approval with your offer. Sellers look for this when considering your deposit.
- Track deadlines in writing. Calendar every date, send notices before the cutoff, and collect receipts and confirmations from escrow.
Real‑world scenarios
- Scenario A, refundable deposit. You offer 300,000 dollars with a 3,000 dollar deposit and a 10‑day inspection period. The inspection reveals major foundation issues. You give written notice within the period and cancel per the agreement. The escrow holder returns your 3,000 dollars.
- Scenario B, forfeited deposit. You place a 3,000 dollar deposit. Your inspection period passes with no objection, and your financing deadline lapses because documents were not delivered to the lender. You later cannot close. The seller may be entitled to the deposit under the contract.
- Scenario C, competitive strategy. In a multiple‑offer situation, you offer a 5,000 dollar deposit and a 7‑day inspection period. Your protections remain in place because you did not waive contingencies. The larger deposit helps signal commitment to the seller.
Buyer checklist
Use this quick plan to stay organized from offer through closing.
Before you write an offer:
- Get a current pre‑approval and proof of funds.
- Discuss deposit amount options that fit your goals and market conditions.
- Select a reputable local escrow or title company.
When you submit the offer:
- Confirm the exact deposit amount, the escrow holder’s name, and the deposit deadline in the purchase agreement.
- Set inspection, financing, appraisal, and title timelines that you can meet.
After acceptance:
- Deliver the funds promptly and get a written receipt from escrow.
- Calendar all contingency deadlines and send any notices in writing.
- Keep copies of inspection reports, lender letters, appraisal results, and any title correspondence.
If you need to cancel:
- Give written notice within the contract period tied to your contingency.
- Provide supporting documents if requested by escrow.
- Ask the escrow holder to confirm when and how funds will be released.
Common mistakes to avoid
- Missing a deadline. Even one day late can affect refund rights.
- Waiving key protections. Do not waive inspection, financing, or appraisal without careful advice.
- Vague escrow details. Your contract should clearly state who holds the money and how disputes are handled.
- Late delivery. Plan for bank transfer times and escrow office hours so you meet the deposit deadline.
Royal Oak market notes
Royal Oak is a popular, close‑in suburb with access to schools, amenities, and transit. When inventory is tight, sellers may see multiple offers. In those moments, larger deposits and faster timelines are more common. Local title and escrow teams handle these funds every day and follow standard Michigan procedures for receipts, releases, and dispute handling. For unusual terms or disputes, consider consulting a Michigan real estate attorney.
How I can help
You deserve a calm, clear process and a confident offer. As a neighborhood‑focused REALTOR based in Birmingham and serving Royal Oak and nearby Oakland County suburbs, I help you right‑size your earnest money, set smart contingency timelines, and coordinate the escrow steps so your funds are protected. My approach is hands‑on and detail‑driven, the same care I bring to staging and strategy for every client move.
If you are preparing to buy in Royal Oak and want a plan that balances strength and safety, let’s talk. Connect with Kathy Remski to map out your next steps.
FAQs
How much earnest money is typical for Royal Oak homes?
- Many buyers offer 1,000 to 5,000 dollars or about 1 percent of the purchase price, with higher percentages in competitive situations.
When do Royal Oak buyers need to deposit earnest money?
- The purchase agreement sets the deadline, and local practice often requires delivery within 24 to 72 business hours after acceptance.
Can Michigan buyers get earnest money back after a failed inspection?
- Yes, if your contract includes an inspection contingency and you provide written notice within the inspection period as required by the agreement.
Who usually holds earnest money in Oakland County?
- A neutral escrow holder, most often a title or settlement company named in the purchase agreement, holds and disburses the funds.
What happens to earnest money if the appraisal is low?
- If you have an appraisal contingency and the seller will not adjust, you may cancel within the deadline and recover your deposit per the contract.
How is earnest money used at closing in Michigan?
- Your deposit is applied to your down payment or closing costs and appears as a credit on your closing statement.
What if buyer and seller disagree about releasing earnest money?
- The escrow holder keeps funds until both parties sign a mutual release or a court, mediation, or arbitration directs how to disburse them.
Is earnest money required to make an offer in Royal Oak?
- It is standard practice to include it, since deposits signal commitment, but the amount and terms are negotiable within the purchase agreement.
