Buying or selling a home in St. Louis often moves fast. In the rush, one small but important detail can cause big stress: earnest money. If you are not sure how much to offer, who holds it, or when it is refundable, you are not alone. This guide breaks down exactly how earnest money works in Missouri, what to expect in the St. Louis market, and how to protect your deposit. Let’s dive in.
Earnest money basics
Earnest money is a buyer’s refundable deposit submitted with an offer to purchase a home. It shows good faith and tells the seller you are serious. If the sale closes, the deposit is applied to your cash to close, such as your down payment or closing costs.
Sellers appreciate earnest money because it helps protect them while the home is under contract. Buyers benefit because a solid deposit can make your offer more credible, especially when there are multiple offers.
Common forms include personal check, certified check, cashier’s check, or a wire transfer. Best practice is to place the funds in an escrow or trust account held by a neutral third party.
How it works in St. Louis
In the St. Louis metro, title companies and closing or escrow agents commonly hold earnest money. In some cases, a real estate brokerage trust account or an attorney’s client trust account may hold the funds. The holder, often called the escrowee, must follow Missouri rules for holding and disbursing client funds.
Disbursement follows the purchase contract. If the deal closes, funds are credited at closing. If the deal falls apart, the contract’s contingencies, deadlines, and release provisions guide whether the deposit is returned or forfeited.
Security matters. Wire instructions can be a target for fraud. Always confirm wiring details by phone using a trusted number for your title company or agent. Do not rely on a phone number in a new email.
How much earnest money to offer
Deposit size varies by price point, competition, and property type. In the St. Louis area, common ranges include:
- Entry-level homes: often $500 to $2,000
- Typical single-family homes: commonly $1,000 to $5,000
- Higher-priced or highly competitive situations: about 1% to 3% of the purchase price
Several factors influence the amount:
- Competition and seller expectations. Multiple offers may push deposits higher.
- Financing type. Cash offers sometimes include larger deposits. Conventional, VA, or FHA financing may influence negotiation.
- Property condition. Riskier properties can prompt higher deposits.
- New construction. Builders often use their own contracts and set deposit expectations.
- Speed and certainty. A strong deposit paired with clean terms can help your offer stand out.
Local norms shift with market cycles and by neighborhood. Aim for a deposit that is competitive but still protects your cash if something goes wrong.
Refunds and common contingencies
You keep your refund rights by meeting your contract deadlines and properly using contingencies. The most common contingencies include:
Inspection contingency
- You can inspect the home and either accept, negotiate repairs or credits, or cancel within the inspection period. If you cancel within the deadline and follow the notice requirements, you generally preserve your refund rights.
Financing contingency
- If you cannot obtain a loan despite good-faith efforts and within the agreed timeline, you may cancel and receive your deposit back, subject to the contract terms and proper documentation.
Appraisal contingency
- If the home appraises below the contract price and you and the seller cannot agree on a new price, you may be able to cancel under the appraisal contingency.
Title contingency
- If title defects are not resolved, you may cancel and seek a refund.
Home sale contingency
- If your purchase depends on selling your current home and it does not sell per the contract terms, you may cancel in the timeframe allowed.
To protect your refund rights, follow three steps:
- Track deadlines. Inspection, financing, and appraisal dates matter.
- Provide written notice. Use the contract’s required delivery method.
- Save documentation. Keep records of inspections, lender communications, and any repair requests or responses.
When you could lose your deposit
Earnest money is at risk when you cancel outside your contingency periods or miss deadlines. Common forfeiture scenarios include:
- Cancelling after contingencies have been removed or deadlines have expired.
- Failing to close for reasons not covered by contingencies, such as changing your mind.
- Defaulting on the contract, where the seller invokes a liquidated damages clause if allowed by the contract.
If the seller breaches
If the seller fails to perform, such as refusing to close or deliver clear title, you can usually demand the return of your earnest money. Depending on the contract, you may also have other remedies, such as damages or specific performance. The exact remedy depends on the form used and the contract language.
Key deadlines in Missouri contracts
Missouri transactions often use standardized forms with predictable timelines. Always review the exact form in your deal. Common timeline elements include:
- Earnest money delivery deadline. You must deliver the deposit to the named escrow holder within the time stated in the contract. Missing this can be a breach.
- Inspection period and objection deadline. Complete inspections and deliver any objections or repair requests before the deadline.
- Loan application and mortgage commitment dates. Apply promptly and obtain a commitment by the agreed date.
- Appraisal timeline. Order and receive the appraisal within the specified period and address any gap.
- Closing and possession dates. These define when you close and take possession.
- Time is of the essence. When present, deadlines are strict and missing them can be a breach.
- Release instructions. The contract should identify who holds the funds and the rules for disbursement.
How deposit disputes are resolved
If a deal falls apart and there is disagreement about the deposit, the contract typically guides the process. Common paths include:
- Mutual release signed by buyer and seller that instructs the escrow holder to release funds.
- Mediation or arbitration if required by the contract.
- Litigation as a final step when parties cannot agree.
- Holdback instructions that delay release until the dispute is resolved or until closing if the deal ultimately proceeds.
Keep clear records of notices, emails, and any agreed extensions. Good documentation helps resolve disputes faster.
New construction vs resale
Builder contracts often require specific deposit amounts and have different timelines and release rules than resale contracts. Expect more structured payment schedules and stricter builder-driven terms. Review the builder’s deposit policy, refund triggers, and what happens if the builder delays or changes the delivery timeline.
Practical checklists
For buyers
- Get preapproved before you write an offer to reduce financing risk.
- Choose a realistic deposit for the neighborhood and price point.
- Deliver the deposit on time and get a receipt.
- Track inspection, financing, appraisal, and title deadlines.
- Work with a reputable title company and verify wire instructions by phone.
For sellers
- Require the deposit to be held in a neutral escrow account.
- Review the buyer’s financing strength and contingency timelines before accepting.
- Understand how liquidated damages and release provisions work if the buyer defaults.
Common pitfalls to avoid
- Missing the deposit delivery deadline.
- Letting inspection or financing dates pass without written notice.
- Relying on verbal promises not written into the contract.
- Assuming earnest money is always non-refundable or always refundable. It depends on your contract and timing.
- Responding to fake wire emails. Always confirm wiring details by phone using known contact information.
Protect your deposit from wire fraud
Wire fraud is a real risk. Follow these simple steps:
- Confirm wiring instructions by calling your title company or escrow officer at a trusted phone number you already have.
- Never act on wiring changes sent by email without verbal confirmation.
- Use your bank’s verified transfer process and compare account numbers digit by digit.
- Send a small test wire if your bank allows it, then confirm receipt before sending the full amount.
Final thoughts
Earnest money is a small part of your offer with big impact on your negotiating power and risk. In St. Louis, most deposits fall into a few common ranges, and your contract’s contingency and deadline structure will determine whether funds are applied at closing or returned if a deal falls apart. Choose a deposit that supports your goals, meet your deadlines, and document every step.
If you want a plan tailored to your price point and neighborhood, our team helps buyers and sellers across the Greater St. Louis metro navigate deposits, deadlines, and contract strategy with confidence. Connect with Show + Sell STL to talk through your next move or to Get Your Free Home Valuation.
FAQs
How much earnest money is competitive in St. Louis right now?
- Many buyers use $1,000 to $5,000 for typical homes, with higher-priced or multiple-offer situations often at 1% to 3% of the purchase price. Your offer terms and local competition should guide the final number.
Who should hold the earnest money for safety?
- Title companies or closing escrow agents commonly hold deposits in Missouri. Brokerage trust accounts or attorney trust accounts are also used. A neutral escrow account is best practice.
If my financing falls through, do I get my deposit back?
- If you acted in good faith and meet the financing contingency deadlines and notice requirements in your contract, you can usually cancel and receive a refund. Documentation matters.
What happens to my deposit if the home fails inspection?
- If you cancel or renegotiate within the inspection period under the contract terms, you typically preserve your refund rights. Missing the inspection deadline can change the outcome.
Can a seller keep my earnest money if they refuse to sell?
- If the seller breaches, you can usually demand the deposit back and may have other remedies depending on the contract. The specific language controls what happens next.
How long can an escrow holder keep the deposit if there is a dispute?
- The escrowee follows the contract and Missouri rules. Funds are held until the parties sign a mutual release or a dispute-resolution process such as mediation, arbitration, or a court order directs disbursement.
What proof should I keep to protect my refund rights?
- Keep inspection reports, lender communications, proof of deposit delivery, written notices, and any signed addenda or extensions. Organized records help resolve disputes quickly.
