Buying in Highland or central Denver and wondering how much earnest money to put down, and how to keep it safe? You are not alone. Earnest money plays a big role in how offers are judged and how protected you are if plans change. In this guide, you will learn how earnest money works in Colorado contracts, typical Denver ranges, the deadlines that protect you, and practical steps to avoid costly mistakes. Let’s dive in.
Earnest money basics
Earnest money is a good‑faith deposit you make when your offer is accepted. It shows commitment to the purchase and gives the seller some security if you breach the contract. In Colorado, the deposit is written into the standard purchase contract and is usually applied to your cash due at closing.
Your earnest money is typically held in escrow by a neutral third party. That is often a title company, an attorney, or a broker’s trust account, as laid out in the contract. The money remains your property unless the contract says the seller can keep it because of a default or a dispute decision awards it to the seller.
How it works in Colorado
Colorado brokers commonly use a standard written contract that spells out the earnest‑money amount, who will hold it, and when it is due. Your contract will control the exact terms and timelines.
Delivery and escrow
Your contract will state when you must deliver earnest money, such as within a set number of days after acceptance. Always get a written escrow receipt that confirms the amount, the date received, and the name of the escrow holder. Save this with your contract paperwork.
Contingencies that protect you
Several common contingencies protect your deposit when used correctly and on time:
- Inspection contingency with a right to object or terminate after inspections.
- Financing or loan‑commitment contingency if you cannot secure your loan by the stated date.
- Appraisal contingency if the property does not appraise at the contract price or an agreed standard.
- Title review period to object to issues found in the title commitment.
If you terminate under one of these allowed contingencies and before the related deadline, your earnest money is typically refundable.
When you could forfeit
If you miss deadlines or remove protections, your risk goes up. After contingencies expire, a buyer default can allow the seller to keep the earnest money as damages or pursue remedies described in the contract. Some contracts include a liquidated‑damages clause that can limit the seller’s recovery to the earnest money, but whether that applies depends on what is checked and agreed to in your contract.
Disputes and releases
If there is a disagreement over who gets the deposit, escrow holders usually require a written mutual release or a court or mediator decision before releasing funds. Most contracts include a path for mediation, arbitration, or litigation if parties cannot agree.
Keep good records
Save copies of escrow receipts, the pages of your contract that list earnest money, all signed deadline notices, and any termination notices. Clear records support your claim to a refund if you end a deal within your rights.
How much in Highland
Earnest‑money amounts vary with price point and market conditions. In the Denver area, agents often see the following practice‑based ranges, not legal rules:
- Lower‑priced listings or less competitive settings: mid‑$1,000s to about $5,000.
- Higher‑priced homes or competitive neighborhoods like Highland: often 1% to 3% of the purchase price in stronger seller markets.
- Multiple‑offer situations or cash‑equivalent offers: buyers sometimes increase deposits or offer larger non‑refundable portions to stand out.
As an example, on an $800,000 Highland home, a 1% to 3% deposit could be $8,000 to $24,000. This is only a scenario to show scale, not a rule. Work with your broker to gauge current neighborhood norms and what will make your offer both competitive and safe.
What affects the amount
- Price of the home and how meaningful the deposit feels to a seller.
- Current market conditions in Highland and nearby central neighborhoods.
- Your financing type and whether an appraisal will be required.
- Which contingencies you keep, and for how long.
- Seller expectations and local custom at the time you write the offer.
Key deadlines to track
Your deadlines protect your earnest money. Put the actual calendar dates in your phone and on a shared checklist with your agent.
- Earnest‑money delivery. Get it to the named escrow holder by the contract deadline and confirm receipt.
- Inspection window. Many contracts use a negotiated period that is often about 5 to 14 days as a market practice. Use this time to inspect, object, or terminate in writing if needed.
- Loan‑commitment date. If you are financing, the financing or loan‑commitment deadline commonly falls about 21 to 30 days from acceptance in many markets, but it is negotiable. Stay in close contact with your lender.
- Appraisal timeline. If the appraisal comes in low, use the appraisal objection and cure deadlines to protect your rights. This often ties into the financing contingency.
- Title review dates. Read the title commitment and raise any objections within the set period.
- Closing date. This is the finish line. Missing it without a permitted reason can be a default that puts your deposit at risk.
Stronger offer, safer deposit
You can write a strong offer without taking on avoidable risk. Consider these strategies:
- Increase the deposit amount while keeping key contingencies and clear deadlines.
- Shorten timelines only if you have the capacity to meet them, such as rapid inspections or an underwriter‑ready loan file.
- Avoid waiving essential protections unless you understand the risk to your deposit and have a backup plan.
- Communicate with the seller through your agent about what matters to them, like a rent‑back or specific closing date, which can help you compete without exposing your earnest money.
Buyer checklist
Use this quick checklist to stay on track from offer to closing.
Before you sign
- Confirm who will hold the earnest money and exactly when it is due.
- Verify the deposit amount and any liquidated‑damages selection in the contract.
- Decide which contingencies you will keep and note every deadline.
After you sign
- Deliver the deposit on time and get a dated escrow receipt.
- Calendar inspection, financing, appraisal, and title deadlines.
- Work with your lender early to meet the loan‑commitment date.
If plans change
- Send any termination or objection notices in the form and time the contract requires.
- Keep copies of all notices and confirmations.
- If there is a dispute over release of funds, consult your agent and consider the contract’s dispute‑resolution steps or legal counsel.
When to call the pros
Lean on your team when the stakes are high:
- Your broker can advise on Highland norms and how to structure a competitive, protected offer.
- The title or escrow company can confirm receipt and explain release procedures.
- A real estate attorney can help if a dispute arises or if contract language is unclear.
Buying in Highland should feel exciting, not stressful. With the right plan, your earnest money can help your offer stand out while staying protected. If you want a clear strategy tailored to Highland and nearby Denver neighborhoods, connect with Molly Weiss for concierge‑level guidance from offer through closing.
FAQs
What is earnest money in Colorado real estate?
- It is a good‑faith deposit written into your Colorado purchase contract, held in escrow, and usually applied to your funds due at closing unless the contract gives it to the seller after a default.
How much earnest money is typical in Highland Denver?
- Practice varies, but competitive Highland offers often show 1% to 3% of price, while less competitive scenarios may see mid‑$1,000s to about $5,000; confirm current norms with your agent.
When is earnest money refundable under Colorado contracts?
- If you terminate within allowed contingencies and by the deadlines, such as inspection, financing, appraisal, or title review, your deposit is typically refundable.
What happens to my deposit if the appraisal is low?
- Use the appraisal objection and cure deadlines in your contract; together with financing protections, they can preserve your right to terminate and recover your earnest money.
Who holds earnest money in a Denver transaction?
- A neutral escrow holder, often a title company, an attorney, or a broker’s trust account, as specified in your contract.
How do I get my earnest money back after a permitted termination?
- Provide timely written notice under the contract, then work with your agent and escrow holder on release steps; keep copies of notices and the escrow receipt.
Can I lose my earnest money if financing falls through?
- If you miss the loan‑commitment deadline or waive financing protections, you could be at risk; if you comply with the financing contingency on time, your deposit is typically protected.
