Have you heard the term “earnest money” and wondered how it actually works in Golden? You are not alone. When you write an offer in Colorado, this deposit is one of the first decisions you make, and it sets the tone for the rest of the deal. In this guide, you will learn what earnest money is, who holds it, typical amounts seen around Golden, and the timelines and contingencies that protect your refund. Let’s dive in.
Earnest money in Colorado, explained
Earnest money is your good faith deposit that shows a seller you intend to buy. You pledge it when you make an offer, and it is held in escrow until you close or the contract ends under its terms. If you close, it is usually applied to your down payment or closing costs.
In Colorado, the Contract to Buy and Sell Real Estate identifies the deposit amount, the escrow holder, and the delivery deadline. It also spells out how funds are disbursed if the deal does not close. Treat those details as your roadmap.
Who holds your deposit
In Colorado, earnest money is typically held by a title or escrow company, a closing attorney, or the listing broker’s trust account. Brokers who hold funds must follow Colorado trust account rules. The contract lists the escrow holder by name and sets the date and time for delivery.
How much earnest money in Golden
There is no single rule for deposit size. Sellers and agents think about your deposit as a signal of commitment, alongside price, financing strength, contingencies, and closing timeline.
Common ranges in Colorado, including Golden, look like this:
- Entry level condos or townhomes: often several thousand dollars, for example 1,000 to 5,000 dollars depending on price.
- Single family homes for move up buyers: often 1 percent to 3 percent of purchase price in balanced markets.
- In competitive moments, some buyers offer 2 percent to 5 percent or a larger flat number to stand out.
Golden tends to track Denver metro patterns. When competition is mild, deposits are modest. When multiple offers are common, deposits rise. The right number for you depends on price point, your comfort, and current competition. Ask your local agent to share recent accepted offer examples for the neighborhood and price band you are targeting.
When earnest money is refundable
Your deposit is refundable to the extent your contract’s contingencies and notice rules preserve that right. If you use a contingency properly and on time, you usually get your deposit back.
Inspection contingency
Purpose: gives you time to inspect the home and either negotiate repairs or cancel. The inspection period is set in the contract. Many buyers use about 7 to 10 calendar days, but confirm your written deadlines.
Refund rule: if you object or terminate within the inspection deadline and follow the contract’s notice steps, your earnest money is generally refundable.
Financing and appraisal
Financing contingency protects you if you cannot get a mortgage commitment. A common window is about 21 to 30 days, but your contract controls the exact date. If you notify the seller on time that you cannot obtain financing and terminate as the contract requires, your deposit is usually refundable.
The appraisal contingency lets you respond if the appraisal comes in below the contract price. If you terminate within the appraisal or loan deadlines per the contract, that typically preserves your refund.
Title, survey, and HOA review
You have time to review the title commitment, any survey, and HOA documents. If you find a serious, unresolved issue and you object or terminate within the stated window, your earnest money is usually protected.
Other protections and common failure modes
Other protections may include disclosures, environmental matters, or verification of square footage and acreage. On the flip side, buyers most often lose refundability by missing a deadline or failing to send proper written notice. If you default after contingencies expire, the seller may be allowed to keep the deposit as liquidated damages, depending on the contract language.
If there is a dispute about who is entitled to the funds, both parties are often asked to sign a written release. If they cannot agree, the escrow holder may hold the funds until the parties use mediation, arbitration, or court, as the contract provides.
Deadlines and notices that protect you
Your contract sets firm dates and specifies how to deliver notices. To protect your refund rights:
- Track every deadline as soon as the contract is signed, including whether the days are calendar or business days.
- Use the contract’s notice forms or formats and deliver them as required.
- Keep copies of everything, including inspection reports and lender letters.
- Work with a local title or escrow company that is familiar with Jefferson County closings.
Step by step, from offer to closing
Before you write an offer
- Get a strong preapproval from your lender, not just a prequalification. Make sure the loan process fits the timeline you plan to include in your offer.
- Ask your agent for recent comps and examples of earnest money amounts from accepted offers in Golden neighborhoods that match your price point.
- Decide your risk tolerance. Know which contingencies matter most to you.
Prepare the contract
- Specify the deposit amount and the escrow holder by name.
- Set clear contingency deadlines for inspection, appraisal, loan commitment, title review, and HOA review. Confirm whether days are calendar or business days.
- Align the loan and appraisal deadlines with your lender’s expected timeline.
- In a competitive situation, discuss strategy with your agent. Options may include a higher deposit, tightening timelines, or limiting certain contingencies. Understand the tradeoffs and legal risk before you commit.
After mutual acceptance
Deliver earnest money by the contract deadline. Many Colorado deals call for delivery within 24 to 72 hours after acceptance, but your contract controls.
Schedule inspections immediately so you can object, negotiate, or terminate within your inspection window.
Stay in weekly contact with your lender to keep appraisal and underwriting on track for the loan commitment deadline.
Review title, survey, and HOA documents as soon as they arrive. Raise any objections in writing before the deadline.
If you need to terminate
- Use the proper written notice referenced in your contract and send it before the deadline.
- Keep copies of inspection reports, lender denial letters, and your notice of termination. These documents support your claim for a refund from escrow.
- If both sides agree to release funds, request a mutual written release. If not, follow the dispute steps listed in the contract.
Strategy tips for competitive Golden offers
Calibrate your deposit to the market moment. A strong number can support your story as a qualified buyer, but it should still fit your comfort and cash needs for closing.
Tighten but do not rush. Shorter timelines can appeal to sellers, yet you still need enough time to inspect and secure your loan.
Communicate lender strength. A clean preapproval and a responsive lender help sellers view your deposit and your offer as reliable.
Avoid blanket waivers. If you consider limiting a contingency to compete, discuss targeted approaches that reduce risk, such as keeping inspection rights while focusing on major systems.
Wrap up and next steps
Earnest money is a simple idea, but in practice it is all about the details. The amount you choose should match your strategy and the neighborhood’s competition. Your refund rights depend on meeting deadlines and sending the right notices. With a clear plan and the right local team, you can make a confident offer in Golden.
If you want help tailoring deposit amounts and timelines to your goals, connect with Monica Graves for a focused game plan and coaching through each step.
FAQs
How much earnest money should a Golden buyer expect to post?
- Common ranges include several thousand dollars for entry level homes and about 1 percent to 3 percent of price for many single family purchases, with higher amounts in competitive moments.
Who holds earnest money in Colorado transactions?
- A title or escrow company, a closing attorney, or a broker’s trust account typically holds the funds, and the contract names the holder.
When is earnest money refundable to the buyer?
- If you terminate under a valid contingency and deliver written notice before the deadline, the deposit is generally refunded under the contract.
What are the key contingencies that protect my deposit?
- Inspection, financing, appraisal, title review, survey, and HOA document review are common protections, each with its own deadline.
How fast do I need to deliver the deposit after acceptance?
- Many Colorado contracts call for delivery within 24 to 72 hours after acceptance, but always follow the exact delivery deadline in your signed contract.
What happens if the buyer and seller dispute the earnest money?
- The escrow holder often requires a written mutual release or holds funds until the parties follow the contract’s dispute process, which may include mediation, arbitration, or court.
