Have you heard you need “earnest money” to buy a home in Milpitas but are unsure how much and why it matters? You are not alone. With Silicon Valley prices and fast-moving deals, your deposit can shape how competitive your offer looks and how protected you are if plans change. In this guide, you will learn typical deposit ranges, how escrow handles your funds in California, how contingencies protect you, and smart strategies for both buyers and sellers. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you put down after a seller accepts your offer. It shows you intend to complete the purchase. In most cases, it gets credited to your down payment and closing costs at closing.
Your purchase contract controls what happens to the deposit. Contingency clauses and timelines decide when your money is safe and when it could be at risk. Sellers value earnest money because it signals commitment and offers some protection if a buyer defaults under the contract.
How much earnest money in Milpitas
Typical ranges and examples
In many California and Silicon Valley transactions, buyers offer about 1% to 3% of the purchase price as earnest money. In competitive Milpitas situations, buyers often aim toward the higher end of that range.
Here are helpful examples to put numbers in context:
- Homes around $800,000 to $1.2 million: deposits often fall between about $10,000 and $30,000.
- Properties at $1.5 million and higher: deposits often scale up, for example $25,000 to $50,000 or more, depending on competition.
- Some buyers use smaller deposits, such as $5,000 to $10,000, especially for lower-priced condos or when they want strong contingency protections.
These are guidelines, not rules. Your deposit should reflect price, competition, your financing, and your risk tolerance.
What pushes your deposit up or down
Several factors influence deposit size in Milpitas:
- Market competitiveness. Hot listings and multiple offers support higher deposits.
- Financing type. All-cash buyers may use larger deposits. Buyers with loan or appraisal contingencies may choose moderate deposits.
- Appraisal and loan risk. If there is uncertainty, some buyers keep deposits closer to the lower end until contingencies are removed.
- Seller preference. Some sellers ask for stronger deposits or faster delivery.
- Price tier and property type. Single-family homes and higher price points often mean larger deposits.
- New construction. Builders may require staged deposits that differ from resale norms.
How California escrow handles your deposit
Who holds the funds
In Santa Clara County and across California, a neutral escrow or title company usually holds your deposit in an escrow or trust account until closing or termination under the contract. In some cases, a broker may handle funds briefly, but deposits must be placed promptly according to regulations and written instructions.
When the money is due
Your purchase agreement sets the deadline. Many Milpitas deals call for delivery at acceptance or within 24 to 72 hours after acceptance. Clarify the exact timing before you draft your offer.
How you pay
Common forms include wire transfer to escrow, cashier’s check, certified check, or a verified electronic transfer. Personal checks can delay clearance. Always confirm wiring instructions directly with the escrow company by phone using a trusted number. Wire fraud is a known risk.
How it is applied
At closing, your earnest money is credited to the purchase price, your down payment, or your closing costs, depending on how your final figures line up.
If the deal ends early
- If you cancel within the terms of a valid contingency, your deposit is typically returned according to the contract.
- If you default without a contractual right to cancel, the seller may be entitled to keep the deposit or seek other remedies, subject to the contract and any agreed liquidated damages language.
- If the seller breaches, you may be entitled to a return of your deposit or other remedies.
If there is a dispute, escrow follows the written instructions. If parties cannot agree, escrow may hold funds until both sides sign a release or there is a court order or other resolution process per the agreement.
Contingencies and your deposit risk
Common buyer protections
- Inspection contingency. You can investigate the property and cancel within the inspection period if needed.
- Loan or mortgage contingency. If your required financing cannot be obtained in time, you can cancel within the period.
- Appraisal contingency. If the appraisal comes in low and you cannot reach an agreement, you can usually cancel within the period.
- Title, HOA document review, and sale-of-home contingencies may also apply.
When your deposit becomes “at risk”
Your deposit is typically refundable while your contingencies are still active and you act within the set time frames. Once you remove contingencies in writing or let them lapse, your ability to recover the deposit usually narrows. Some offers stage or partially release contingencies on a timeline, which changes your exposure.
Non-refundable layers and liquidated damages
Some buyers offer a larger deposit or add a non-refundable portion to stand out in competitive situations. This can help a seller feel secure, but it increases your risk if the deal fails for reasons not covered by the contract. Many California purchase agreements include optional liquidated damages language that can limit a seller’s recovery to the deposit if both parties agree in advance. Ask your agent to explain how this clause works in current forms and what it means for your risk.
Buyer strategies in Milpitas
- Calibrate your deposit to the market. Review recent comps, days on market, and winning offer terms. For hot listings, consider 1.5% to 3% or a clear, fast deposit timeline.
- Align deposit size with contingencies. If you want full inspection, appraisal, and loan protections, a moderate deposit can balance strength with safety while those protections are active.
- Strengthen your overall offer. Pair your deposit with strong pre-approval, clear timelines, and a flexible closing date when possible.
- Use secure payment methods. Wire or cashier’s check are standard. Verify wiring instructions directly with escrow.
- Track deadlines. Put contingency dates on your calendar and document removals in writing so you know exactly when your deposit becomes exposed.
Seller strategies in Milpitas
- Set expectations up front. Ask for prompt deposit delivery and specify acceptable forms of payment in the offer.
- Balance deposit size with other terms. A lower deposit can work if the buyer shows strong financing and reasonable contingencies. A higher deposit can add confidence in competitive bidding.
- Consider liquidated damages language. This can provide clearer remedies if the buyer defaults. Review it with your agent and, if needed, legal counsel.
- Choose the offer with the best overall fit. Deposit size is one lever. Also weigh price, contingencies, timeline, and buyer qualifications.
Real scenarios you might see
- Competitive single-family listing around $1.2 million with multiple offers. A buyer offers about 2.5% to 3% earnest money and a shortened inspection period to stand out.
- Condo listed at a conservative price with longer market time. A buyer offers a smaller deposit, such as $5,000 to $10,000, with full contingencies.
- New construction. The builder requires staged deposits, for example an initial reservation amount and a second deposit at contract signing, which differ from resale customs.
Safeguard your deposit
- Confirm escrow details in writing and speak directly with your escrow officer before wiring funds.
- Do not rely on emailed wiring changes without verbal confirmation using a trusted phone number.
- Keep a checklist of contingency deadlines and deliver notices on time.
- Ask your agent to walk you through the contract language before you sign so you understand when your deposit is protected and when it is at risk.
When you structure the right deposit with the right protections, you can compete in Milpitas with confidence. If you are selling, the right deposit helps you separate committed buyers from the rest while giving you a smoother path to closing.
Ready to plan your next move in Milpitas? The Samit Shah Team will help you calibrate deposit size, set clear timelines, and negotiate terms that match your goals. Work With Us.
FAQs
What is earnest money in a Milpitas home purchase?
- It is a good-faith deposit you make after offer acceptance to show commitment, typically credited to your down payment or closing costs at closing.
How much earnest money should I offer in Milpitas?
- Many buyers offer 1% to 3% of the price. In competitive situations, buyers often lean toward the higher end. Dollar examples vary by price tier.
When is earnest money due after acceptance in California?
- Your contract sets the timeline. Many agreements call for delivery at acceptance or within 24 to 72 hours.
Who holds my earnest money in Santa Clara County?
- A neutral escrow or title company typically holds the funds in a trust account until closing or a contractually allowed termination.
Is earnest money refundable if I cancel?
- If you cancel within valid contingency periods, it is typically refundable under the contract. After contingencies are removed, recovery is more limited.
