Buying in Salt Lake City and hearing “earnest money” for the first time? You’re not alone. You want your offer to stand out without putting your cash at risk. This simple guide walks you through how much to put down, when to pay it, who holds it, and how to keep it protected in Utah.
Let’s dive in.
What earnest money is
Earnest money is a good‑faith deposit you include with your offer to show you’re serious about buying. If the sale closes, it’s credited to your down payment or closing costs. If you breach the contract, the seller may keep it under the contract’s remedies. In a competitive market, a strong deposit can help your offer look more committed to a seller.
Typical amounts in Salt Lake City
There’s no law in Utah that sets the deposit. You and the seller agree on the amount in the purchase contract. In Salt Lake City, you’ll commonly see:
- $1,000 to $5,000 on conservative or lower‑priced offers
- Around 1% to 3% of the purchase price as a general rule of thumb
- $5,000 to $15,000 or more (about 2% to 3%+) on higher‑priced homes or in multiple‑offer situations
These are typical ranges. Your exact number should match the property, your budget, and current market conditions.
How to choose your amount
- Aim for a number that shows commitment without stressing your cash flow.
- In multiple offers, consider increasing the deposit to stand out.
- If the market is calmer or you need flexibility, choose a more conservative amount within the typical range.
When and where you deposit
Your purchase contract sets the deadline for delivering earnest money. In Utah, it’s often due within 1 to 3 business days after the seller accepts your offer. Make sure the deadline is written clearly so you don’t miss it.
Most buyers deposit with a neutral title or escrow company named in the contract. Sometimes funds go to a broker’s trust account. Either way, your money stays in an escrow account and is applied to you at closing.
How Utah protects your deposit
Utah requires brokers and escrow holders to follow strict rules for handling trust funds. Licensed title and escrow companies use regulated procedures to safeguard and disburse deposits. You can add simple protections to reduce risk and keep your money traceable.
Practical protections to use:
- Get a written receipt from the escrow or title company showing the exact amount and date deposited.
- Name a reputable, licensed title or escrow company in the contract.
- Keep all deadlines and contingency periods in writing so everyone knows the timeline.
When you can get it back
Your contract will include contingencies that protect your deposit if something changes and you need to cancel within the allowed time. Common protections include:
- Inspection contingency: You cancel within the inspection period per the contract.
- Financing contingency: Your loan falls through within the financing period despite good‑faith efforts.
- Appraisal contingency: The appraisal comes in low and you cancel within the appraisal period if price adjustments are not agreed.
- Title or HOA document review: Unresolved title problems or unsatisfactory HOA documents within the review period.
Always follow the contract notice steps and timelines, and provide any required documentation, like an inspection notice or lender denial letter.
When you can lose it
Earnest money is at risk if you default outside your contract protections. Common reasons for forfeiture include:
- Missing key deadlines, like removing contingencies after the period expires
- Canceling after you waived contingencies
- Not pursuing financing in good faith or making misrepresentations
- Backing out for a non‑contingency reason after timelines have passed
Utah contracts often make deadlines decisive. Watch dates carefully.
Disputes and release basics
If you cancel within your rights, both parties usually sign a release instructing the escrow holder to return your deposit. If there’s a disagreement, the escrow company typically holds funds until there’s a mutual release or a court order. Some Utah contracts include a liquidated damages clause that may allow the seller to keep the deposit as the sole remedy for buyer default, depending on the wording.
If a seller fails to perform, you can typically recover your earnest money and may pursue other remedies based on the contract.
Salt Lake City offer strategies
Here are three common approaches you can tailor to the property and market conditions:
Conservative offer
- Earnest money: About $1,500
- Inspection period: 10 to 15 days
- Financing: Standard time for underwriting
- Due date: Within 3 business days
- Good for buyers who want flexibility and extra time
Competitive offer
- Earnest money: $5,000 to $10,000, or roughly 1% to 2%
- Inspection period: 5 to 7 days, or “as‑is” with a right to cancel if needed
- Financing: Tighten timelines but avoid waiving
- Due date: Within 1 to 2 business days
- Good when multiple offers are likely and you have strong financing
Aggressive offer
- Earnest money: 2% to 3%+
- Inspection: Very short or waived
- Appraisal/financing: Waived or highly limited
- High reward, higher risk of losing your deposit if something falls through
Buyer checklist
- Confirm the escrow or title company in your contract and deposit on time.
- Get a written receipt of your deposit.
- Track all contingency deadlines on a shared calendar.
- Keep lender communications and pre‑approval details documented.
- Understand the risk before you waive or shorten contingencies.
- If an issue arises, notify the seller and escrow in writing per the contract and include any needed proof.
Next steps
A smart earnest money plan helps your offer shine and protects your cash if the unexpected happens. Before you write, check current Salt Lake City conditions, decide how competitive you need to be, and make sure your timelines fit your comfort level and lender’s speed. When you’re ready, align deposit size, deadlines, and contingencies with your goals.
If you want a clear, confident plan for your offer, reach out to James Roth for local guidance and a step‑by‑step earnest money strategy that fits today’s Salt Lake market.
FAQs
Typical earnest money in Salt Lake City
- There’s no set amount, but you’ll often see $1,000 to $5,000, about 1% to 3% of price, and higher deposits on competitive listings.
Who holds earnest money in Utah
- Most deposits go to a licensed title or escrow company named in the contract; sometimes a broker trust account holds funds, subject to state rules.
When earnest money is due after acceptance
- Your contract sets the deadline, commonly within 1 to 3 business days after the seller accepts your offer.
How to get a refund after canceling
- Cancel within the contingency period, follow the contract’s notice steps, provide any required documentation, and request a mutual release for escrow to disburse funds.
What if the seller won’t release funds
- Escrow typically holds the deposit until a mutual written release or court order; your contract may call for mediation, arbitration, or litigation.
