Earnest Money in Connecticut Explained

Thinking about making an offer on a home in Glastonbury? One of the first questions you will face is how much earnest money to put down and how to keep it safe. It is a common step in Connecticut, but the details can feel confusing when you are focused on finding the right home. In this guide, you will learn what earnest money is, typical amounts in Greater Hartford, how escrow works in Connecticut, the contingencies that protect your deposit, and what to do if a dispute comes up. Let’s dive in.

What earnest money is

Earnest money is the deposit you make after your offer is accepted. It shows the seller you are serious and ready to move forward. The funds sit in a neutral escrow account and are credited to you at closing toward your down payment or closing costs.

The purpose is twofold. First, it gives the seller confidence to take the home off the market while everyone works toward closing. Second, it gives the seller a financial remedy if you default without a valid contract reason.

How it differs from a down payment

Your down payment is paid at closing and is part of the final purchase price. Earnest money is paid earlier and held in escrow as a credit toward that final amount. If the sale closes, the deposit applies to your costs. If the deal ends within a valid contingency, your deposit can be refunded as the contract allows.

How much to offer in Glastonbury

There is no single rule for deposits in Connecticut. The amount is negotiated and written into your Purchase and Sale Agreement.

Typical ranges in Greater Hartford

• Lower-priced homes under about $300,000: many buyers offer $1,000 to $5,000.
• Mid-price homes around $300,000 to $600,000: $5,000 to $15,000, often about 1 to 2 percent of price.
• Higher-priced homes over $600,000: commonly 1 to 2 percent or higher in competitive situations.

Glastonbury home prices often sit above the City of Hartford’s median, so deposits here tend to be in the mid to upper parts of those ranges. The right figure depends on recent local activity and your offer strategy.

Factors that change the amount

• Market conditions: In a strong seller market with multiple offers, a larger deposit can help your offer stand out.
• Property type and condition: Unique or new-construction homes may warrant a higher deposit.
• Financing and documentation: Lenders often verify the source of your deposit funds during underwriting.
• Risk tolerance: You may balance a larger deposit with strong contingency protections.

A local agent and your attorney can help you match the amount to the property and market, without taking on unnecessary risk.

How escrow works in Connecticut

Connecticut closings often involve attorneys for both buyer and seller. The Purchase and Sale Agreement will name who holds the funds and when the deposit is due.

Who typically holds the funds

• A buyer’s or seller’s attorney using a client trust account
• The listing broker’s escrow or trust account
• A title or closing attorney serving as escrow agent

Whoever holds the money must follow strict trust-account rules. Funds must not be mixed with business accounts, and transactions must be documented.

Timing, receipts, and deadlines

Contracts commonly require the deposit within 24 to 72 hours, or within a set number of business days after acceptance. Inspection, appraisal, financing, and title timelines are also negotiated in the contract. Always get a written receipt showing the amount, date received, and the escrow account designation. Missing a deadline can affect whether your deposit is refundable, so put all dates on your calendar on day one.

Contingencies that protect your deposit

Contingencies are your main protection. They define when you can cancel and get your earnest money back.

• Inspection contingency: Lets you inspect the home and negotiate repairs or credits. If you cancel within the inspection period as the contract allows, your deposit can be returned.
• Financing contingency: Protects you if your loan commitment does not come through by the deadline.
• Appraisal contingency: Helps if the appraisal is below the purchase price and the seller will not adjust.
• Title contingency: Covers you if title issues or liens cannot be resolved.
• Sale-of-home contingency: Useful if you must sell your current home first, though less common in competitive markets.

Each contingency needs clear written language with deadlines and steps for notice. Vague terms weaken your protection. In Connecticut, have your attorney review the Purchase and Sale Agreement so your protections and notice requirements are clear.

Keep your deposit safe: escrow and wire tips

Wire fraud and simple missteps can put your money at risk. Use this quick checklist.

• Confirm escrow in writing: Ensure the Purchase and Sale Agreement names the escrow holder, deposit amount, and timing.
• Get a receipt: Ask for written confirmation of the amount, deposit date, and escrow account designation.
• Verify the escrow agent: Call the attorney or broker at a trusted phone number you look up yourself. Do not rely only on email.
• Confirm wire instructions by phone: Before sending any funds, confirm routing and account details with the escrow agent using a verified number.
• Keep records: Save all emails, texts, and receipts tied to your deposit.
• Track deadlines: Put inspection, appraisal, financing, and title dates on your calendar and set reminders several days early.

These steps reduce fraud risk and help you prove compliance with the contract.

What happens if something goes wrong

Most issues resolve with a simple signed release. When parties disagree, the path is set by the Purchase and Sale Agreement and escrow instructions.

• Mutual release: Buyer and seller sign a written agreement telling the escrow holder how to disburse funds.
• Hold or interpleader: The escrow agent may hold funds until both sides agree, or they may ask a court to decide if the contract allows it.
• Negotiate or mediate: Your attorney can negotiate a settlement or follow the contract’s mediation or arbitration rules.
• Litigation: If required, a Connecticut court can resolve breach-of-contract claims.

If you think your deposit is at risk, review your contract and deadlines first, then contact your attorney right away.

Earnest money vs. offer strength

A larger deposit can signal confidence, but it is only one part of the offer. In competitive Glastonbury sales, sellers also weigh timing, clean contingency terms, and your lender’s strength. You can often improve your position with tight but realistic deadlines and clear contingency language while keeping protections you need. A data-based approach to pricing and timeline can help you stay competitive without exposing your deposit to avoidable risk.

A step-by-step timeline example

While every contract is different, many Connecticut offers follow a similar rhythm:

1. Offer accepted: You sign the Purchase and Sale Agreement with deposit terms.
2. Deposit delivered: You send earnest money to the named escrow holder by the deadline and receive a written receipt.
3. Inspection window: You complete inspections, negotiate repairs or credits, or cancel within the inspection period if needed.
4. Appraisal and title: Your lender orders the appraisal and your attorney or title agent reviews title. Any issues are addressed within stated timelines.
5. Mortgage commitment: You provide documents for underwriting and seek commitment by the financing deadline.
6. Clear to close: Funds are prepared, final walkthrough is completed, and your deposit is credited on the closing statement.

Throughout, keep communication documented and dates tracked. Small missed steps can create big deposit problems.

Next steps for Glastonbury buyers

If you are preparing to write an offer, align your deposit, contingencies, and timelines with local market conditions. In Connecticut, this usually means coordinating with your agent and attorney early. A strong plan helps you compete while preserving your right to a refund if something outside your control arises.

Want help planning an offer that balances competitiveness with protection for your earnest money? Talk with the team at Brian Burke CT for local guidance on deposit amounts, timelines, and contingency language that fits the Glastonbury market.

FAQs

How much earnest money should I offer in Glastonbury?

• In many cases, buyers offer from a few thousand dollars up to about 1 to 2 percent of the price, adjusted for market conditions and offer competitiveness.

Is earnest money refundable in Connecticut?

• It can be refundable if you cancel within the contract’s contingencies, such as inspection, financing, appraisal, or title, or if the seller breaches the agreement.

Who holds my deposit in a Connecticut sale?

• Often a buyer’s or seller’s attorney, the listing broker’s escrow account, or a title or closing attorney as escrow agent, as stated in the Purchase and Sale Agreement.

What happens to my deposit at closing?

• Your earnest money is credited to you on the settlement statement, reducing what you need to bring to closing for your down payment or costs.

Can the seller keep my deposit after a bad inspection?

• Not if you follow your inspection contingency steps and deadlines. If contingencies were waived or deadlines missed, the seller may have grounds to retain funds under the contract.