Earnest Money Basics for Scottsdale Buyers

Buying in Scottsdale and hearing about earnest money? You are not alone. When you find the home you want, that deposit can help your offer rise to the top and keep your deal on track. In this guide, you will learn what earnest money is, how it works in Scottsdale, how much buyers often put down, and how to protect it through each step. Let’s dive in.

What earnest money is

Earnest money is a buyer’s good-faith deposit that shows you intend to complete the purchase. The money is held in escrow by a neutral third party. If the sale closes, your deposit is applied to your down payment or closing costs. It is not an extra fee.

In a competitive market, your deposit signals strength to the seller. It also gives the escrow agent funds to apply at closing and provides a potential remedy if a buyer defaults, subject to the contract and contingencies.

How much is typical in Scottsdale

Across many U.S. markets, earnest money is often a flat amount or a percentage of the price. A common range in competitive or higher-priced areas is 1 to 3 percent of the purchase price. Entry or moderate tiers sometimes see deposits in the low thousands.

Scottsdale includes many higher-priced and luxury homes. Sellers here may expect deposits toward the higher end of typical ranges, especially in multiple-offer situations. The right amount depends on the neighborhood, price tier, and market heat, so decide with your agent based on current conditions and your risk tolerance.

Who holds your deposit and how to pay

In Arizona, title or escrow companies commonly hold the earnest money. Less often, a broker’s trust account is used. The contract will name who holds the funds and how they will be handled.

Payment methods vary by escrow company policy. Wire transfers are common for larger sums, and many title companies accept certified or cashier’s checks. Some accept electronic payment platforms. Always keep proof of payment and a written receipt from the escrow holder.

Key timelines and delivery

Your purchase contract sets the deadline for delivering the earnest money after the offer is accepted. Local custom is often a short window, usually a few business days, but the exact timing is contract specific.

Plan your payment method early so you can meet the deadline without stress. If you are wiring funds, confirm you can access your bank in time and that you have the verified wiring instructions on hand.

Contingencies that protect your money

Arizona purchase contracts, such as standard forms from the Arizona Association of REALTORS, outline when your earnest money is refundable. Common buyer protections include:

• Inspection contingency. You can cancel within the inspection period and recover your deposit if you follow the contract steps.
• Financing contingency. If you cannot obtain the loan and give proper notice per the contract, your deposit is often refundable.
• Appraisal contingency. A low appraisal can trigger rights to cancel or renegotiate. Follow the contract timelines to preserve your protections.
• Title contingency. Unresolved title defects can allow you to cancel and recover your deposit.

The key is to follow every notice, response, and removal step exactly as written. Missing a deadline or skipping a form can put your deposit at risk.

When you could lose it

You may forfeit earnest money if you default without a valid contingency or do not follow required notice and cure procedures. Examples include failing to deliver documents on time, missing contingency removal deadlines, or backing out without a contractual right to cancel.

If the seller defaults, such as refusing to close without cause, the contract outlines your remedies. Those often include return of your earnest money and, in some cases, specific performance or other legal options.

What happens in a dispute

Escrow holders generally need written instructions from both parties to release earnest money. If you disagree on who should receive it, escrow typically holds the funds until there is a mutual release, arbitration, mediation, or a court order.

Some Arizona contracts include mediation or arbitration provisions. Review your agreement and talk to your agent about the process if a dispute arises.

Step-by-step checklist for buyers

Use this quick plan to set yourself up for a smooth deposit and strong protections:

1. Before you offer
   • Ask your agent about deposit norms for your price tier and neighborhood.
   • Prepare proof of funds or a lender pre-approval to support a competitive deposit.
2. When you write the offer
   • Choose an amount that fits the market and your risk tolerance.
   • Clarify timelines and any added language about the deposit if needed.
3. Once your offer is accepted
   • Confirm where to send funds and the exact deadline.
   • Decide on wire or certified funds and schedule the transfer right away.
   • Save receipts and written confirmation from escrow.
4. During contingencies
   • Book inspections immediately and track deadlines.
   • If financing or appraisal issues arise, follow every contract notice step.
5. If there is a problem
   • Request a written accounting from escrow.
   • Consider mediation or arbitration if required by the contract.
   • Loop in your broker or legal counsel for larger disputes.

Wire safety tips you should use

Wire fraud is a common real estate scam. Protect your deposit with these steps:

• Verify wiring instructions by calling the escrow or title company at a known-good phone number. Do not trust phone numbers in email.
• Never act on wiring changes you receive by email or text without confirming by phone.
• Send a small test amount if time allows, then confirm receipt before wiring the full sum.
• Keep transfer receipts and confirmation emails.

Smart strategy in a competitive market

In Scottsdale’s higher-priced segments, a well-sized deposit can help your offer stand out. Balance that signal with the right protections. Use clear contingency timelines, stay ahead of inspections and underwriting, and follow every notice step in writing.

If you anticipate tight competition, talk with your agent about ways to strengthen terms without putting your deposit at unnecessary risk. You can adjust contingency durations, include clarifying language, and ensure your financing path is solid before you offer.

The bottom line

Earnest money is your first move after an accepted offer. When you size it correctly, deliver it on time, and follow the contract to the letter, you protect your position and keep your path to closing smooth. If a dispute pops up, escrow will hold funds until both parties agree or a dispute process resolves it.

Want a clear plan tailored to your price point and neighborhood in Scottsdale? Connect with Taylor Smart to align your deposit strategy with market conditions and your goals.

FAQs

What is earnest money in an Arizona home purchase?

• It is a buyer’s good-faith deposit held in escrow that is applied to your down payment or closing costs if the sale closes.

How much earnest money do Scottsdale buyers usually put down?

• In competitive or higher-priced segments, a common range is 1 to 3 percent of the purchase price, though amount varies by listing, neighborhood, and market heat.

Who holds my earnest money in Scottsdale?

• A title or escrow company commonly holds the funds in Arizona, as named in your purchase contract.

When is earnest money due after my offer is accepted?

• Your contract sets the deadline, often within a few business days, so plan your payment method and transfer timeline in advance.

Can I get my earnest money back if I cancel?

• Yes, if you cancel under a valid contingency and follow all contract notice and timing requirements, your deposit is typically refundable.

What could cause me to forfeit my earnest money?

• Defaulting without a valid contingency, missing deadlines, or failing to follow notice and cure steps can put your deposit at risk.

How are earnest money disputes resolved in Arizona?

• Escrow usually holds funds until both parties give written release or a mediation, arbitration, or court order decides, per your contract.

Is wiring earnest money safe?

• It can be safe if you verify wiring instructions by phone using a known-good number and never trust instructions that arrive by email or text without confirmation.