Ever wondered why a seller asks for money up front when you write an offer? If you are buying in Plymouth’s 48170, earnest money is a normal part of the process and a smart way to show you are serious. You want to know how much to offer, how to protect it, and when you could get it back if things do not go as planned. In this guide, you will learn the essentials, local ranges, timelines, and practical steps to keep your deposit safe and your offer strong. Let’s dive in.
What earnest money is
Earnest money, sometimes called a good‑faith deposit, is money you submit with your purchase offer to show the seller you intend to buy the home. If you close, that deposit is credited toward your down payment and closing costs. If you cancel under the contract’s contingency rules, it is typically refundable. If you back out without a permitted reason, the seller may have the right to keep it.
In Michigan, standard purchase agreements used by local agents include sections for the deposit amount, who holds it, when it is due, and the contingencies that protect you. The contract spells out how the money is handled, when it can be released, and what happens if there is a dispute.
How much earnest money in Plymouth
There is no single “right” number in 48170. Amounts vary with price point and how competitive the listing is. Use these practical ranges as a starting point.
- Entry or more affordable homes: about $1,000 to $5,000, or roughly 0.5% to 1% of the price.
- Mid‑market homes: often 1% to 2% of the purchase price.
- Higher‑end or competitive listings: 2% to 3% or more when multiple offers are expected.
Helpful examples:
- If a home is $250,000, 1% is $2,500 and 2% is $5,000.
- If a home is $400,000, 1% is $4,000 and 2% is $8,000.
- If a home is $600,000, 1% is $6,000 and 2% is $12,000.
Your best move is to match your deposit to the property and market conditions. A larger, well‑protected deposit can strengthen your offer. Just be sure your contingency timelines and documentation are tight so your money stays safe.
Who holds the deposit and how it is protected
In Michigan, your earnest money is typically held by one of these parties in a trust or escrow account:
- The listing brokerage
- The buyer’s brokerage
- A title company or closing attorney
Brokers and title companies follow state licensing and trust‑account rules. Ask for a written receipt and confirmation of the escrow holder’s name and account type. There is no special federal insurance for earnest money, but if funds sit in a bank trust account, they may be in an FDIC‑insured institution. Confirm details with the escrow holder.
Smart safety steps:
- Get a written receipt and deposit confirmation.
- Know exactly who can release funds and under what contract conditions.
- Keep proof of your wire or check delivery.
- If wiring funds, verify instructions by calling the escrow holder at a known phone number to avoid wire‑fraud scams.
At closing, the escrow holder applies your earnest money to your down payment or closing costs. If the deal does not close, the release and contingency language in your contract guides whether you get it back.
Timelines that matter in 48170
Your purchase offer will state when the deposit must be delivered after the seller accepts your offer. Common windows are 24 to 72 hours. Put that deadline on your calendar and plan for the funds now so you can perform on time.
Most Plymouth buyers also include contingency windows, such as:
- Inspection: often about 7 to 10 days to complete the inspection and respond in writing.
- Financing: time to secure a mortgage commitment while meeting lender document deadlines.
- Appraisal: protection if the appraised value comes in below the purchase price.
- Title: protection if title defects cannot be cleared.
Missing a deadline can change whether your deposit is refundable. Set reminders, and keep your lender, inspector, and agent aligned from the start.
When it is refundable or forfeited
Situations where your earnest money is typically refundable:
- You cancel within the inspection period due to issues identified in the inspection.
- Your financing contingency applies and you cannot obtain the loan in time despite acting in good faith.
- The appraisal comes in low and the parties cannot agree on a solution during the appraisal contingency.
- Title problems cannot be cleared under the contract terms.
Situations where the seller may keep it:
- You cancel after contingency deadlines expire without a permitted reason.
- You refuse to close even though contract conditions have been met.
- You otherwise breach the agreement and the contract allows the seller to keep the deposit as liquidated damages.
If the seller defaults, you may be entitled to a return of your deposit and other remedies. Standard Michigan forms include a mutual release process and dispute paths. Keep everything in writing and follow the procedures in your agreement.
Pre‑offer checklist for Plymouth buyers
Before you write:
- Get a strong lender preapproval letter. Preapproval clarifies your finance timeline and supports your offer.
- Decide on an earnest‑money strategy. Choose a competitive amount you can fund quickly.
- Pick your escrow holder. For larger deposits, a title company or attorney escrow is common.
- Confirm funds access. Line up a certified check or safe wire plan so you can meet the deposit deadline.
- Set your contingency windows. Discuss inspection, appraisal, and financing timelines with your agent and lender.
When drafting your offer:
- State the deposit amount, the escrow holder, and your deposit deadline.
- Define inspection, appraisal, financing, and title contingency periods clearly.
- If offering a lower deposit, consider other terms that help the seller, such as flexible possession or a shorter closing, while keeping your protections.
After acceptance:
- Deliver funds on time and get a receipt.
- Book your inspection right away and respond within the window.
- Submit lender documents promptly and track your appraisal date.
- Communicate any issues in writing and follow the contract if you need to negotiate or cancel.
Quick calculator examples
Use these quick totals to plan your deposit and cash at closing.
Entry example:
- Listing price: $300,000
- 1% deposit: $3,000; 2% deposit: $6,000
- Effect: your deposit is credited at closing toward your down payment or closing costs. If you plan 5% down, that $3,000 counts toward your total cash.
Mid‑market example:
- Listing price: $400,000
- 1% deposit: $4,000; 2% deposit: $8,000
Higher/competitive example:
- Listing price: $600,000
- 2% deposit: $12,000; 3% deposit: $18,000
Important notes with these examples:
- If you cancel within an active contingency, your deposit is typically refundable per the contract.
- If you back out after contingencies expire without legal cause, the seller may keep the deposit.
- Larger deposits can strengthen your offer but increase risk if you waive or miss contingencies.
Smart strategies to strengthen your offer
- Right‑size your deposit. Use a meaningful amount for the price point and the competition you expect.
- Tighten, do not waive, key contingencies. Shorter inspection periods and clear deadlines can look strong while keeping you protected.
- Show you can perform. A complete preapproval and quick deposit delivery help your case.
- Communicate clearly. A clean, organized offer with precise timelines builds seller confidence.
Common mistakes to avoid
- Delivering funds late. Missing your deposit deadline can weaken your position and risk default.
- Vague contingency language. Unclear deadlines make disputes more likely and can endanger your refund rights.
- Wiring without verification. Always confirm instructions by phone with the escrow holder you know.
- Waiving protections lightly. In a competitive moment, it is tempting to waive contingencies. Know the risks before you do.
How REALTORS® Bob and Mike help 48170 buyers
You deserve a clear plan and a steady hand from offer to closing. Our team guides you on the right deposit amount for your target home, drafts clean terms, tracks every deadline, and coordinates with your lender, inspector, and title company so your deposit stays protected. We also watch shifting local norms in Plymouth and nearby suburbs so your strategy fits today’s conditions, not last season’s.
Ready to move with confidence? Reach out to REALTORS® Bob and Mike to plan your earnest‑money strategy and write a strong, safe offer.
FAQs
What is earnest money in a Plymouth, MI home purchase?
- It is a good‑faith deposit you include with your offer to show you intend to buy. If you close, it is credited at closing. If you cancel under a valid contingency, it is typically refundable.
How much earnest money should I put down on a 48170 home?
- Many buyers use 1% to 2% for mid‑market homes, lower flat amounts in less competitive cases, and 2% to 3% for higher‑end or multiple‑offer situations. Match your amount to the home and market.
Who holds my earnest money in Wayne County transactions?
- A listing or buyer brokerage, a title company, or a closing attorney usually holds it in an escrow or trust account. Always get a written receipt and confirm where funds are deposited.
When is earnest money refundable for Plymouth buyers?
- It is often refundable if you cancel within active contingency periods, such as inspection, appraisal, financing, or title, according to the contract terms.
Can the seller keep my earnest money in Michigan?
- Yes, if you miss deadlines or breach the contract without a permitted reason, the seller may be allowed to keep the deposit as liquidated damages under the agreement.
How fast do I need to deliver the deposit after offer acceptance?
- Most offers set a deadline, commonly 24 to 72 hours. Meet this deadline and obtain a receipt to stay in compliance and protect your position.
What protects my deposit if there is a dispute in a Plymouth deal?
- Standard Michigan contracts include mutual release and dispute procedures. Keep documentation and follow the contract’s process. Ask your agent about next steps if a dispute arises.
