Writing an offer on a home in Olympia and not sure how much earnest money to put down? You are not alone. This deposit matters because it shows sellers you are serious, and it affects your risk if plans change. In this guide, you will learn how earnest money works in Washington, what is typical in Thurston County, how contingencies protect your deposit, and strategies to strengthen your offer without taking on undue risk. Let’s dive in.
What earnest money is
Earnest money is a buyer’s deposit delivered with your offer. It shows commitment and is credited back to you at closing, usually toward your down payment or closing costs. It is not a fee to the seller. Depending on contract terms and performance, it can be refunded or forfeited.
How it works in Washington
Your Purchase and Sale Agreement controls the deposit. It sets the amount, who holds it, when it is due, and what happens if either party defaults. If the sale closes, the earnest money is applied to your buyer costs so you bring less cash to the table at closing.
Who holds your deposit
In Washington, a neutral third party typically holds earnest money. In many Thurston County transactions, a local title or escrow company holds the funds. In some cases, a broker trust account will hold the deposit until it is transferred to the closing agent per the contract. You should always confirm where your deposit will be held and get a receipt.
How it differs from other funds
Earnest money is separate from your lender’s escrow for taxes and insurance and is separate from your down payment until closing. It goes into a designated trust or escrow account and does not go to the seller directly when you make the deposit.
Typical amounts in Olympia
In the South Sound, deposit sizes vary by price point, property type, and how competitive the listing is. Sellers often look at earnest money as a signal of commitment.
Percentage ranges and examples
In ordinary Olympia transactions, buyers often offer about 1% to 3% of the purchase price as earnest money. In competitive situations, buyers sometimes increase to 2% to 5% or choose a larger flat amount to stand out. For example, on a $400,000 home, 1% is $4,000, 2% is $8,000, and 3% is $12,000.
Local market factors
Micro-markets in Thurston County make a difference. Desirable neighborhoods, newer construction, or a well-priced home with short supply can attract higher deposits and tighter timelines. In a hot seller market, buyers tend to increase deposits and shorten contingency periods. In a balanced or more buyer-friendly market, deposits commonly trend lower and timelines longer.
Financing and property type
Cash or fully underwritten buyers can credibly offer larger deposits. Buyers using typical financing can still offer competitive deposits while keeping financing and appraisal protections. New construction sellers may expect higher or phased deposits. Condos or bank-owned and short-sale properties can have different norms than standard resale homes.
Contingencies and your refund rights
Your refund rights tie directly to your contract contingencies and whether you follow the deadlines and notice rules in your agreement.
Common protections
Contingencies that frequently protect your deposit include:
- Inspection contingency
- Financing or mortgage contingency
- Appraisal contingency
- Title and survey review
- Buyer’s home sale contingency
- HOA, CC&R, or permit review contingencies
How deadlines control refunds
Each contingency has a specific deadline. If you deliver proper written notice to terminate within a contingency period, you are generally entitled to a refund of your earnest money. If you miss a deadline and later try to cancel, the seller may claim the deposit as liquidated damages or pursue other contract remedies. Follow the contract’s delivery and notice requirements exactly.
Liquidated damages and disputes
Many Washington standard contracts limit the seller’s remedy to keeping the earnest money if the buyer defaults, which is called liquidated damages. If that clause is not included, the seller may seek actual damages in court. Escrow will release funds when both parties sign instructions. If there is a dispute, funds may remain in trust until the parties settle or a mediator, arbitrator, or court directs disbursement.
Strengthen your offer without undue risk
You can use earnest money to help your offer stand out and still protect yourself with smart terms.
Raise the deposit responsibly
Consider moving from a typical 1% to around 2% to show commitment while keeping exposure reasonable. In a bidding environment, a larger deposit can signal confidence. Pair any increase with clear contingency protections rather than removing contingencies outright.
Stage deposits and tighten timelines
You can negotiate a staged deposit. For example, make a smaller initial deposit with the offer, then increase it after you remove the inspection contingency. Short, specific contingency windows also help. Set realistic but finite timelines for inspections and financing and meet every notice deadline in writing.
Financing and appraisal strategies
Get preapproved before you shop and keep your lender updated so you can meet financing deadlines. Include an appraisal contingency that allows you to address a low appraisal. You can also negotiate how any appraisal gap will be handled so both sides know the plan before problems arise.
If you need to sell first
A home sale contingency can work, but it often weakens your offer in competitive situations. Ask about a kick-out clause or firm dates for your sale. Some buyers explore short-term rental, bridge financing, or a rent-back with the seller to reduce reliance on a home sale contingency.
Buyer checklist for Thurston County
Use this quick list to stay organized and protect your deposit:
- Confirm who will hold your funds and when your deposit is due. Get a receipt.
- Calendar every contingency deadline and understand required notice procedures.
- Complete inspections early within the inspection window using licensed professionals.
- Keep all communications and notices in writing and deliver them per your contract.
- Maintain steady progress on your loan so you comply with the financing contingency.
- Ask escrow how funds are held, whether interest applies, and what happens if a dispute arises.
Local context and what to ask
Market conditions in Olympia shift during the year and by neighborhood. That is why micro-market guidance matters. When you prepare an offer, ask your agent and escrow officer:
- What earnest money amount is typical for similar homes in this area right now?
- Where will my deposit be held and how quickly will it be deposited?
- What are the recommended inspection and financing timelines for this property type?
- Is there a liquidated damages clause in the contract, and how would default be handled?
- If a dispute arises, what dispute resolution path applies and how does escrow handle a hold?
Final thoughts
Earnest money is a practical tool. In Olympia and across Thurston County, most buyers succeed with deposits in the 1% to 3% range, increasing to 2% to 5% when competition is strong. Your contract’s contingencies and deadlines control refund rights, so precision with timing and notices is essential. By pairing a confident deposit with clear, finite protections, you can stand out without taking on unnecessary risk.
If you are weighing how to structure your deposit for a specific property, we are here to advise. For discreet, one-on-one guidance tailored to your goals in the South Sound, connect with Morrison House Sotheby’s International Realty®.
FAQs
What is earnest money in Washington real estate?
- It is a buyer’s deposit submitted with your offer that shows seriousness and is credited to you at closing, subject to your contract’s terms and contingencies.
How much earnest money is typical in Olympia, WA?
- Many buyers offer about 1% to 3% of the purchase price. In competitive cases, deposits often increase to 2% to 5% or a larger flat amount.
Who holds earnest money in Thurston County and when is it deposited?
- A neutral party such as a title or escrow company usually holds it. Your contract sets the due date, and you should receive a receipt after deposit.
Is earnest money refundable if my financing falls through?
- If you have a financing contingency and properly terminate within its deadline using the contract’s notice rules, you are generally entitled to a refund.
What happens if I miss a contingency deadline?
- If you fail to terminate within the period and later try to cancel, the seller may claim the deposit as liquidated damages or pursue other remedies under the contract.
Should I make my earnest money non refundable to win a bidding war?
- Some buyers offer non refundable terms after inspections to appear stronger, but this increases risk. Use only with full understanding and clear advice.
How are earnest money disputes resolved in Washington?
- Escrow releases funds by mutual agreement or per instructions. If parties disagree, the funds may be held until resolution through mediation, arbitration, or court.
