Earnest Money Explained for Sunnyvale Buyers

Writing an offer in Sunnyvale and wondering how much earnest money to put down? You are not alone. In a competitive Silicon Valley market, the deposit you offer can influence how sellers view your commitment. In this guide, you will learn what earnest money is, local norms in Sunnyvale, when deposits are refundable, and how to structure your offer to stay competitive while managing risk. Let’s dive in.

What earnest money is

Earnest money, sometimes called a deposit, is a good‑faith payment you make when you write an offer. It shows the seller you are serious and ready to perform. The deposit is held in an escrow or trust account and is credited toward your purchase price and closing costs if the sale closes. If the deal does not close, refund rules follow the purchase agreement and contingency deadlines.

Sunnyvale deposit norms

In Sunnyvale, deposit amounts are often written as a percentage of the purchase price or as a fixed dollar amount. In typical conditions, 1%–3% of the purchase price is common. In multiple‑offer situations, buyers sometimes offer 3%–5% (or higher) to stand out. For example, 1% on a $1,500,000 home is $15,000; 2% on a $2,000,000 home is $40,000; and 3% on a $2,500,000 home is $75,000.

Some buyers, especially at lower price points, use a fixed dollar deposit such as $5,000 to $25,000. The best approach depends on price, market conditions, and your overall offer terms. Remember, your deposit is one signal among many, along with price, contingencies, financing strength, and timeline.

When deposits are refundable

The refundability of your deposit is governed by the purchase agreement and contingency periods. As long as you act within the agreed deadlines, certain contingencies protect your deposit if you need to cancel.

Common contingencies

• Inspection contingency: You may cancel within the inspection period and receive a refund of your deposit.
• Loan contingency: If your lender denies the loan within the contingency period and you follow notice requirements, you can typically cancel and recover your deposit.
• Appraisal contingency: If the home appraises below the purchase price and you cancel per the contract, your deposit is usually returned.
• Title or other negotiated contingencies: These can also protect your deposit if issues arise and you cancel within the agreed timeframe.

When deposit is at risk

When you remove contingencies in writing, or if you miss a contingency deadline, your deposit generally becomes nonrefundable except for seller breaches or other contract protections. If you default after removing contingencies and the contract includes a liquidated damages clause that applies, the seller may seek to keep the deposit. If the seller fails to perform, you can usually recover your deposit and may have other remedies. Escrow typically needs mutual written instructions to release funds, and disputes may require further resolution.

Timelines and escrow steps

Clear timing keeps your deposit protected and your offer competitive. Make sure exact dates are written into your purchase agreement and keep reminders so you never miss a deadline.

Deposit delivery

Standard California forms commonly require you to deliver the initial deposit to escrow within a short period after acceptance, often 3 business days, unless different timing is negotiated. Prompt delivery signals commitment and reduces friction with the seller.

Typical contingency periods

Inspection periods in the Bay Area often range 5–17 days, with 10 days common. Loan contingencies are often 17–21 days, and appraisal typically moves on the lender’s timetable during that period. Escrow closings often run 30–45 days, while 21–30 day closings can be more competitive depending on lender readiness.

Closing and release

At closing, your deposit is credited toward your down payment and closing costs. If the deal cancels, escrow follows the contract and written instructions to release funds. If there is a dispute, escrow may hold funds until the parties reach agreement or a court provides direction.

How to structure a strong offer

Sunnyvale single‑family homes can attract multiple offers. Your deposit strategy should show commitment while balancing your personal risk tolerance.

Options for deposit structure

• Larger initial deposit: Using a higher percentage or dollar amount can strengthen your signal in a crowded field.
• Timely delivery: Depositing within the agreed period, or even sooner, builds trust.
• Staged deposit: Start with a modest initial deposit, then agree in the contract to increase the deposit after inspections or when contingencies are removed. This balances competitiveness with risk.
• Pair with seller‑friendly terms: Shorter contingency windows, a flexible close date, and clear proof of funds can complement a strong deposit.

Risk and reward

Waiving or shortening contingencies may make your offer stand out, but it increases the chance of losing your deposit if issues arise later. Before you commit, weigh how much deposit you can afford to risk against the likelihood of acceptance. Coordinate with your lender so your loan timeline aligns with your contingency dates, and consider legal counsel if you are unsure about nonrefundable language or release clauses.

Buyer checklist

• Choose a deposit strategy: percentage vs. fixed dollar; single deposit vs. staged increase.
• Map every deadline: inspection, appraisal, loan, and contingency removal dates.
• Align with your lender: secure a strong preapproval and confirm appraisal timing.
• Deliver funds promptly: follow the contract’s delivery window and keep proof of deposit.
• Identify escrow holder: ensure the contract clearly names the escrow or trust account.
• Consider local escrow/title companies: familiar teams can keep things smooth.
• Seek advice when needed: consult a real estate attorney if you are asked to make a deposit nonrefundable or sign unusual release provisions.

Mistakes to avoid

• Offering a large deposit without understanding your contingency deadlines.
• Missing written contingency removal or extension dates.
• Waiving protections without lender alignment and a clear risk plan.
• Not specifying who holds the deposit or how funds will be released if the deal cancels.
• Providing weak proof of funds alongside a large deposit, which can undermine your offer.

The bottom line for Sunnyvale buyers

Your earnest money is both a commitment and a tool. In Sunnyvale, most buyers put down 1%–3%, and some increase to 3%–5% in competitive situations. The right amount and structure depend on your price point, your lender’s readiness, and how you balance risk with the need to stand out. With a clear plan, firm deadlines, and the right guidance, you can compete confidently without taking on unnecessary exposure.

If you want a tailored deposit strategy for a specific Sunnyvale home, reach out. You will get seasoned, local guidance, thoughtful negotiation, and a calm, step‑by‑step plan from Suzanne Freeze.

FAQs

What is earnest money in a Sunnyvale home purchase?

• Earnest money is a good‑faith deposit held in escrow or a trust account and credited to your purchase at closing, with refund rules governed by your contract and contingencies.

How much earnest money do Sunnyvale buyers usually offer?

• In typical conditions buyers often offer 1%–3% of the purchase price, and in competitive situations some increase to 3%–5% to strengthen their offer.

Is my earnest money refundable in California if I cancel?

• If you cancel within valid contingency periods, such as inspection, loan, or appraisal, your deposit is generally refundable per the contract.

When could a Sunnyvale seller keep my deposit?

• If you remove contingencies and then default, a seller may seek to keep the deposit under a liquidated damages clause if the contract and law allow.

How quickly must I deliver the deposit in Sunnyvale?

• Standard practice in California often calls for delivery within 3 business days of acceptance, unless a different timeline is negotiated in the contract.

Can I increase my deposit after inspections in Sunnyvale?

• Yes, buyers sometimes use a staged approach with a smaller initial deposit and a contractually agreed increase after inspections or contingency removal.

Who holds earnest money in Santa Clara County transactions?

• Deposits are commonly held by a title or escrow company’s account, though a broker trust account may be used if identified in the contract.