Buying a home in Los Angeles County moves fast, and the earnest money deposit can feel confusing. You want to compete with confidence without putting more money at risk than you need to. The good news is you can protect your deposit and still write a strong offer when you understand how California contracts and timelines work. In this guide, you will learn typical amounts in LA, what happens to your funds in escrow, which contingencies protect you, and smart steps to stay competitive. Let’s dive in.
What earnest money means in California
Earnest money is your good‑faith deposit that tells a seller you are serious. It is part of your total funds to close and is credited back to you at closing. The exact rules are set by your signed purchase agreement.
In California, most agents use the Residential Purchase Agreement from the California Association of Realtors. That contract spells out how much you deposit, where the money goes, when it is due, and when you can get it back. There is no statewide law that sets a fixed deposit amount, so it is negotiated in each deal.
Your deposit is usually held by a neutral escrow or title company. In some cases, a broker may hold it briefly in a trust account until escrow opens. These trust funds are handled under strict rules and fiduciary duties.
Typical earnest money in Los Angeles County
In many California markets, a common deposit is 1% to 3% of the purchase price. In parts of Los Angeles where homes move quickly, you may see higher deposits, often 3% to 5% or more, especially on competitive listings or luxury properties. For lower‑priced homes and condos, buyers sometimes use a flat dollar amount, such as $5,000 to $20,000.
Here are a few simple examples to help you plan:
- $700,000 purchase with 1% deposit → $7,000
- $1,200,000 purchase with 2% deposit → $24,000
- $2,500,000 purchase with 3% deposit → $75,000
LA County is large and diverse. What is typical in a Santa Clarita neighborhood may differ from a hot Westside condo building. Use these as guideposts, then tailor your strategy to the area and price point you are targeting.
How deposits are handled in escrow
Your offer will state the deposit amount and who will hold it. A common setup is to deliver the funds to the named escrow company within a few business days after your offer is accepted. Many sellers want quick proof of deposit.
Once escrow receives your funds, they issue a receipt and hold the money in a separate account. At closing, the deposit is credited toward your down payment and closing costs. If there is a cancellation, escrow can only release funds based on written instructions from buyer and seller, or a legal order if there is a dispute.
Contingencies that protect your deposit
Your deposit is refundable if you cancel within a valid contingency period stated in the contract. Common protections include:
- Loan contingency. If you cannot obtain financing within the agreed period despite good‑faith efforts, you can cancel and request a refund of your deposit.
- Inspection and disclosures contingency. If inspections or disclosures reveal issues you are not comfortable with, you can cancel within the inspection window and keep your deposit.
- Appraisal contingency. If the property appraises below the purchase price and you cannot or will not cover the gap, you may cancel under this contingency.
- Title contingency or cure periods. If there is a title problem that cannot be resolved per the contract, you can cancel.
If you remove or miss a contingency deadline and then cancel or fail to close, the seller may claim your deposit under the remedies allowed by the contract. Many agreements include a liquidated damages option. If that clause applies in your deal, the seller may be able to keep the deposit as the agreed remedy if the buyer defaults. The exact outcome depends on what you and the seller signed.
Timelines you can expect in LA County
Every contract is negotiated, but here are common ranges to help you plan your calendar:
- Deposit delivery: often within 2 to 3 business days after acceptance
- Inspection contingency: often 5 to 17 days after acceptance
- Loan contingency: often 17 to 21 days after acceptance
- Escrow length: commonly 30 to 45 days to close, depending on financing and seller needs
Sellers respond well when you show you can meet tighter but realistic timelines. Before you write an offer, confirm with your lender and inspector how fast they can move so you do not risk your deposit.
Protect your deposit and stay competitive
You can keep your protections and still write a strong offer in Los Angeles. Use these steps:
- Secure a full preapproval. Get a signed loan preapproval, not just a prequalification. Have proof of funds ready for your deposit and closing.
- Deliver funds fast and get a receipt. Follow the contract instructions and send funds by a traceable method. Request written confirmation from escrow.
- Guard against wire fraud. Always confirm wiring instructions by calling the escrow company at a phone number you verify independently. Do not rely on email instructions alone. Ask for written confirmation once funds are received. If you suspect fraud, contact your bank, escrow, law enforcement, and your agent immediately.
- Right‑size your contingency strategy. Keep key contingencies but consider shorter periods if the market demands speed. You can also use appraisal gap coverage instead of waiving the appraisal contingency.
- Consider a larger deposit with protections. A higher deposit can signal strength even if your contingencies remain in place. That can be effective in multiple‑offer situations.
- Choose reputable escrow and title. Ask for written instructions and contact details in your contract. Keep copies of all receipts and confirmations.
Quick checklist for your offer packet:
- Strong lender preapproval and recent proof of funds
- Clear deposit amount and delivery timeline
- Short but realistic inspection and loan windows
- Appraisal gap coverage if needed
- Escrow and title contacts confirmed in writing
- Plan to order inspections on day one
Real‑world LA County scenarios
- Balanced and protected offer
- Purchase price: $900,000
- EMD: 2% ($18,000) delivered within 2 business days
- Inspections in 10 days, loan contingency in 21 days
- Buyer orders inspections on day one and cancels within 10 days due to a major issue. Deposit is refunded.
- Competitive timing, higher risk
- Purchase price: $900,000
- EMD: 3% ($27,000)
- Inspections in 5 days, loan contingency in 17 days
- Lender needs more time. If contingencies expire or are removed and the buyer cannot close, the seller may claim the deposit under the contract.
- Appraisal gap strategy
- Purchase price: $1,500,000
- EMD: 1.5% ($22,500)
- Buyer offers appraisal gap coverage up to $25,000
- Appraisal comes in $20,000 short. Buyer covers the gap and moves forward. If the gap were larger and the appraisal contingency allowed cancellation, the deposit would be refunded if buyer cancels in time.
Key takeaways for LA buyers
- Plan for an earnest money deposit of about 1% to 3%, with more in very competitive areas or at higher price points.
- Expect to deposit funds within a few business days after acceptance and confirm receipt with escrow.
- Protect your deposit with inspection, loan, appraisal, and title contingencies. Know your deadlines.
- You can stay competitive by tightening, not waiving, key contingencies, and by showing strong financing and fast action.
- Use verified wiring instructions and keep every receipt and confirmation.
Ready for local guidance?
If you want a clear plan for deposit amount, timelines, and neighborhood norms in Los Angeles and the Santa Clarita Valley, let’s talk. You will get straightforward coaching, a strong offer strategy, and careful protection of your funds from offer to close. Connect with Kym De Lorenzo to start your home search with confidence.
FAQs
How refundable is earnest money in Los Angeles County?
- It is generally refundable if you cancel within a valid contract contingency, such as inspection, loan, appraisal, or title, and you follow the notice and timing rules in your agreement.
What happens to my earnest money if my loan is denied in California?
- If you have a loan contingency and you cancel within that window with proper documentation, your deposit is typically refundable under the contract. If you remove that contingency and then cannot close, the seller may claim the funds.
Who holds my earnest money in an LA County deal and how is it released?
- A neutral escrow or title company usually holds the deposit and needs written instructions from both parties, or a legal order, to release disputed funds.
How quickly do I need to send my earnest money after my offer is accepted in LA?
- Your contract sets the deadline. Many offers call for delivery within 2 to 3 business days after acceptance, so have funds ready and request an escrow receipt.
Is a bigger earnest money deposit better in competitive Los Angeles neighborhoods?
- A larger deposit can signal seriousness, but you can often get a similar effect by keeping a strong deposit, shortening key contingency periods, and showing solid preapproval and proof of funds.
