Buying a home in Clarkston or elsewhere in Oakland County often starts with one small but important step: putting down earnest money. If you have questions about how much to offer, where it goes, and how to protect it, you are not alone. With clear steps and the right contingencies, you can use your deposit to strengthen your offer without adding unnecessary risk. Let’s dive in.
Earnest money basics in Michigan
Earnest money is a deposit you make to show the seller you are serious. It is not an extra fee. At closing, it is usually credited toward your down payment or closing costs.
Sellers value earnest money because it signals commitment and defines a remedy if a buyer defaults, depending on the purchase agreement. The exact rules for handling and releasing your deposit come from your contract terms and general Michigan contract law, not a single statewide statute. For a consumer-friendly overview of offers and deposits, review the National Association of REALTORS buyer resources at the National Association of REALTORS website.
How much to put down in Clarkston
The right amount depends on price point and current competition. In slower markets and for lower-priced homes, deposits can range from about $500 to $2,000. A common practice in many suburban Michigan purchases is roughly 1 percent of the price. In competitive periods, some buyers offer 2 to 5 percent or more.
Every offer is negotiable. In Clarkston and northern Oakland County, conditions change with inventory and multiple-offer frequency. Ask your agent to review current local data before you set a number. Michigan-specific forms and guidance are available through Michigan REALTORS if you want to understand how standard agreements frame deposits.
Where your deposit goes and when
Most Michigan transactions place earnest money with a neutral holder, often a title or closing company. In some cases an attorney or the listing brokerage’s trust account holds the funds. Your purchase agreement should clearly name the escrow holder and how the money will be applied at closing.
Timing is set by the contract. Many local agreements require the deposit upon acceptance or within 24 to 72 hours after acceptance. Delivery can be by wire or certified check. If wiring funds, always confirm instructions directly with your known title or escrow contact and review the Consumer Financial Protection Bureau’s guidance on secure payments at the Consumer Financial Protection Bureau website.
Contract terms that protect your deposit
Your contingencies are your safety net. Each one must be written into the purchase agreement with clear deadlines and notice requirements. Missing a deadline or sending notice the wrong way can put your deposit at risk.
Inspection contingency
This allows you to inspect the home and request repairs or credits. If the findings are unsatisfactory, you can cancel within the inspection window and recover your earnest money if the contract says so. Follow the notice steps exactly and keep everything in writing.
Financing contingency
If your loan is denied despite timely application and good faith efforts, the financing contingency can allow you to cancel and keep your deposit. Lender timelines and documentation matter, so respond quickly to your lender’s requests and keep proof of your application and communications.
Appraisal contingency
When an appraisal comes in below the purchase price, this clause outlines next steps. You and the seller can renegotiate price or terms, or you can cancel per the contract if no agreement is reached within the time allowed.
Title and survey contingencies
If title issues or survey problems cannot be cured within the contract timeframe, you may be able to terminate and receive your deposit back. Confirm how defects, cure periods, and notices are handled in your agreement.
Sale-of-home contingency
If you need proceeds from your current home, a sale-of-home contingency can help. These clauses include timelines and benchmarks for listing and selling. Whether the deposit remains refundable depends on those specifics.
When earnest money can be forfeited
Common forfeiture scenarios include defaulting after contingencies are removed, failing to deliver required closing funds, or canceling without a contractual right or after deadlines expire. Many purchase agreements say the seller can keep the deposit as liquidated damages in these situations.
Whether a seller can seek more than the earnest money depends on your contract. Some forms limit remedies to the deposit, while others allow additional claims. If a dispute arises, your contract may require mediation or arbitration. The State Bar of Michigan maintains consumer resources and attorney information at the State Bar of Michigan website if you need legal help.
How disputes are typically resolved
Often the parties agree to return or split the funds. If they cannot agree, the escrow holder will usually keep the money in the account until there are joint written instructions or a legal resolution. In some cases, the escrow holder can file an interpleader so a court decides.
To protect yourself, follow contract steps exactly and keep written proof of inspections, loan actions, and notices. If the other side refuses to release your deposit after a valid contingency-based termination, ask your agent about next steps and consider attorney guidance.
What happens at closing in Oakland County
If you close, the escrow holder applies your earnest money to your down payment or closing costs per the contract. The deed and mortgage documents are recorded with the Oakland County Register of Deeds. You can learn more about local recording practices at the Oakland County Register of Deeds.
A simple timeline for Clarkston buyers
- Offer accepted by the seller.
- Earnest money delivered to the named escrow holder, often within 24 to 72 hours.
- Funds sit in escrow while you complete inspections, secure financing, and clear title.
- If you cancel under a valid contingency within the deadline, the deposit is returned per the contract and escrow instructions.
- If you continue to closing, the deposit is credited to your costs.
- If you default without a contract right, the seller may be entitled to keep the deposit, subject to contract terms.
Smart strategies that balance strength and safety
- Calibrate your deposit to market conditions. A higher amount can make your offer stand out in multiple-offer situations, but set clear contingency timelines to keep protection in place.
- Keep portions refundable until contingencies are removed. You can also structure an increased deposit after the inspection period to show confidence without front-loading risk.
- Consider an escalation clause or other terms that strengthen your offer without removing important safeguards. Avoid broad “nonrefundable” language unless you understand every risk.
- Align deadlines with your lender and inspector availability so you can meet every notice requirement on time.
For more background on standard forms and practices across Michigan, visit Michigan REALTORS. You can also review general consumer guidance on homebuying protections at the Consumer Financial Protection Bureau.
Red flags to avoid
- Missing or vague contingency deadlines.
- Escrow holder not named, or an unknown party you cannot verify.
- Instructions to wire funds to a personal account or any unusual recipient.
- Pressure to waive inspection, financing, or appraisal without a clear plan and professional advice.
- “Nonrefundable” deposit language that is not tied to a clear, negotiated benefit.
Local help for a smooth Clarkston purchase
You deserve a clear plan for your deposit, deadlines, and documents. With deep experience in Clarkston and across Oakland County, our team coordinates the escrow holder, timelines, and communications so you stay protected while keeping your offer competitive. We help you set realistic contingency windows, verify wiring details, and track every notice.
When you are ready to make an offer, get expert, local guidance from a trusted Clarkston advisor. Connect with Emily Ford to schedule your free consultation.
FAQs
How much earnest money should a Clarkston buyer expect to put down?
- Amounts vary by price and competition. Many suburban Michigan buyers offer around 1 percent, with $500 to $2,000 common on lower-priced homes and higher amounts in competitive periods.
Who holds earnest money in Michigan real estate deals?
- A neutral escrow holder, often a title or closing company, sometimes an attorney or a listing broker’s trust account, as specified in the purchase agreement.
How soon after acceptance do I need to deposit earnest money in Oakland County?
- Many contracts require the deposit upon acceptance or within 24 to 72 hours, but your exact deadline depends on the agreement you sign.
Which contingencies protect my earnest money in a Clarkston purchase?
- Inspection, financing, appraisal, title, and sale-of-home contingencies, each with specific timelines and written notice requirements.
When is earnest money applied to my closing costs in Michigan?
- If you proceed to closing, the escrow holder credits your deposit toward your down payment or closing costs per the contract.
Under what circumstances can a buyer in Clarkston lose earnest money?
- Common scenarios include default after contingencies are removed, canceling without a contractual right, or missing critical deadlines laid out in the agreement.
What if a seller refuses to release my earnest money after I cancel under a valid contingency?
- Keep written proof and follow contract steps. Resolution may require mediation, arbitration, or an attorney; see the State Bar of Michigan for resources.
Is earnest money refundable in Michigan or is it nonrefundable?
- Refundability depends on your contract. Most deposits are refundable if you cancel under a valid contingency within the deadline and follow notice rules.
How do I avoid wire fraud when sending earnest money in Oakland County?
- Verify wiring instructions directly with your known title or escrow contact and review secure payment tips at the Consumer Financial Protection Bureau.
