Not sure how much to put down as earnest money on a Scottsdale home? You are not alone. This deposit is small compared to the purchase price, yet it carries big weight in your offer and risk. In this guide, you will learn what earnest money is, how much is typical in Scottsdale, when it is refundable, and how to protect it from contract to closing. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you make after a seller accepts your offer. It shows you are serious about buying the home. In Arizona, the deposit is usually held by a title or escrow company or sometimes by the listing broker. If you close, it is credited toward your down payment or closing costs.
The written purchase contract controls what happens to the deposit. Arizona transactions commonly use Arizona Association of REALTORS (AAR) forms. Those forms set when the money is due, who holds it, and the rules for disbursement or return. If there is a dispute, escrow follows the contract and will not release funds without proper written instructions or a court order.
Scottsdale deposit norms
There is no fixed amount you must offer, but local practice offers clear ranges:
- Most offers use about 1-3 percent of the purchase price.
- In competitive or luxury segments, buyers often offer 2-5 percent to stand out.
- Dollar examples: entry-level condos may see $2,000-$5,000; mid-price homes often land between $5,000-$20,000; luxury homes use higher absolute deposits even if the percentage is similar.
How much you put down should match the property tier, market conditions, and your risk comfort once contingencies are removed. In Scottsdale’s higher-price neighborhoods, a percentage-based deposit often sends a stronger signal than a small flat dollar amount.
How to choose your amount
Consider these factors when setting your deposit:
- Market heat. Multiple-offer situations often call for a higher deposit to look competitive.
- Price tier. Larger prices often scale the deposit amount.
- Financing strength. Cash or fully underwritten buyers may choose to signal confidence with more.
- Risk tolerance. Bigger deposits can help you win, but more is at risk after contingencies are waived.
- Seller expectations. Ask your agent about norms for the specific neighborhood and segment.
Timeline and refund rules
Your contract sets the exact deadlines and rules. In local practice, here is what to expect:
- Deposit delivery. Earnest money is typically due within 1-3 business days after acceptance to the escrow holder or listing broker named in the contract.
- Inspection period. Many Scottsdale contracts use a 5-10 day due diligence window. If you cancel within this period per the contract, your deposit is generally refundable.
- Loan contingency. Financing timelines commonly run 21-45 days depending on your lender and loan type. If you cannot secure loan approval and cancel within the contingency, your deposit is typically refundable.
- Appraisal contingency. Often tied to financing, this gives you options if the appraisal comes in low.
- Title and HOA review. You usually have a short period to review the title commitment and HOA documents and cancel if they are unacceptable under the contract.
- Closing date. Standard closings run around 30-45 days. All-cash deals often close faster.
A simple rule of thumb: your earnest money is usually refundable while you are within valid contingency periods. Once you remove or miss contingencies, the deposit is often at risk if you default. Always rely on the contingency and deadline language in your signed contract.
Contingencies that protect you
Contingencies are your safety valves. They define when you can cancel and get your deposit back.
- Inspection contingency. Lets you inspect, request repairs or credits, or cancel if unacceptable issues arise and the contract allows it. Watch the exact dates for delivering notices and responses.
- Financing contingency. Protects you if your loan is denied or not approved by a stated deadline. Tie your dates to your lender’s realistic timeline.
- Appraisal contingency. Gives you options if the appraisal is below the purchase price. You might renegotiate or cancel per the contract terms.
- Title and HOA review. Allows termination if unacceptable title matters or HOA restrictions are identified within the review period.
- Sale-of-home contingency. Sometimes used when you must sell a current home first. This can weaken your offer in competitive Scottsdale segments.
Contract terms to watch closely
- Earnest money delivery date. Missing this can be a breach.
- Contingency deadlines. Put them on your calendar and confirm in writing.
- Liquidated damages language. Some contracts allow the seller to keep your deposit as the sole remedy if you default after removing contingencies.
- Mutual release instructions. Escrow needs proper written instructions to release funds if there is a dispute.
How escrow handles your deposit in Arizona
In Arizona, a title or escrow company typically holds the earnest money. They issue a receipt and record the funds in the escrow file. Their job is to follow the contract and written instructions. They do not decide who is right or wrong in a dispute.
Escrow will only release funds according to the purchase contract, a mutual written release signed by both parties, or a court order. If the parties cannot agree, escrow commonly holds the money until the dispute is resolved, and in some cases may interplead the funds with a court.
If plans change: cancel or default
Life happens. Here is what generally happens next, based on common AAR practice:
- You cancel within contingencies. If you terminate properly and on time under a valid contingency, your earnest money is usually returned.
- You default after removing contingencies. The seller may be entitled to your deposit as liquidated damages depending on the contract. Some contracts allow the seller to seek other remedies too.
- The seller breaches. You may seek to cancel, recover your deposit, and pursue remedies allowed by the contract.
- There is a dispute. Escrow will ask for a mutual release or a court order. Contracts often call for mediation or arbitration before litigation. Timely written notices are crucial.
Steps to protect your earnest money
Use this checklist to keep your deposit safe:
- Negotiate clear, realistic contingency dates that match your lender and inspectors.
- Choose a deposit amount that sends the right signal without risking more than needed.
- Confirm where and when the deposit is due. Deliver funds on time and get a written receipt.
- Track every deadline. Put reminders on your phone and calendar for inspection objections, appraisal, and loan approval.
- Keep all notices in writing. Use the forms your contract calls for and send them on time.
- Save every email, approval, and amendment. Documentation helps if questions arise.
- Coordinate with your lender early about appraisal scheduling and underwriting milestones.
Offer strategies that work in Scottsdale
Different markets call for different approaches. Here are four common strategies:
- Conservative. Smaller deposit, fuller contingency windows, strong inspection and financing protections. Best when protection matters more than speed.
- Balanced. 1-3 percent deposit, 5-10 day inspection, standard loan contingency of 21-30 days. Fits many Scottsdale buyers in average conditions.
- Competitive. 2-5 percent deposit, shorter contingency windows, and stronger terms if financing is solid. Useful when inventory is tight and you accept higher risk.
- Hybrid. Offer a higher deposit to signal strength while keeping core protections. For example, shorten the inspection period but keep financing and appraisal contingencies intact.
Real-world scenarios and tips
- Appraisal comes in low. If you have an appraisal contingency, you can request a price reduction, bring extra cash, or cancel per the contract. Decide quickly because timing matters.
- You missed a deadline. If you miss the inspection objection or financing denial date, you may lose the right to terminate under that contingency. Act fast and ask your agent to review options.
- Seller refuses to release funds. Ask escrow for the deposit receipt, send a written demand referencing the contract terms, and follow the dispute steps your contract outlines. Mediation or arbitration may be required before court.
- You need more time. Use a written amendment to extend deadlines as soon as you sense a delay. Do not rely on verbal agreements.
Your next step
You do not need to guess your earnest money strategy. You need a clear plan that fits the property, the neighborhood, and your financing. That is where a local advisor makes the difference.
If you are getting ready to write an offer in Scottsdale or anywhere across the Phoenix corridor, reach out to the family-founded team at The Mitchell Group AZ. We will walk you through current deposit norms, set smart contingency dates, and help you win with confidence.
FAQs
How much earnest money should a Scottsdale buyer offer today?
- Most buyers offer 1-3 percent of the price, but competitive or luxury listings often see 2-5 percent to stand out.
When is earnest money refundable in Arizona purchases?
- It is generally refundable while you are within valid contingency periods and you cancel properly under the contract.
Who holds the earnest money in a Scottsdale sale?
- A title or escrow company usually holds the funds, though some contracts name the listing broker’s trust account.
What happens if the appraisal is lower than the purchase price?
- If you have an appraisal contingency, you can renegotiate, bring cash to cover the gap, or cancel per contract timelines.
What if I miss an inspection or financing deadline?
- You may lose termination rights tied to that contingency, which can put your deposit at risk if you later default.
How do I get my deposit back if a seller will not sign a release?
- Follow the contract’s notice and dispute steps, request escrow to disburse per the contract, and use mediation, arbitration, or court if needed.
