Ever wonder how much earnest money you should put down on a Kalispell home and what happens to it if things change? You are not alone. Many buyers want to make a strong offer without risking more than they should. In this guide, you will learn what earnest money is, how it works in Flathead County, common amounts, and smart ways to protect your deposit while staying competitive. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you include with your offer to show you are serious about buying. If the sale closes, it is applied to your down payment and closing costs. It tells the seller you intend to perform and gives them limited protection if you breach the contract without a valid reason. The purchase agreement controls the deposit details, including amount, who holds it, when it is due, and when it is refundable.
Typical amounts in Kalispell
Kalispell practice varies with price point and competition. In modest or less competitive situations, you might see $1,000 to $3,000. For many mid-range homes, buyers often offer 1 to 3 percent of the purchase price. In multiple-offer or higher-priced scenarios, deposits can rise to $5,000 to $20,000 or more to strengthen the offer.
Why amounts differ: price, inventory, and leverage. Sellers in tight markets may expect higher deposits or shorter contingency periods. If you plan to waive contingencies, larger or even nonrefundable deposits may be requested, but that increases your risk.
How Montana handles the deposit
Who holds your funds
In Montana, earnest money is typically held by a neutral title or escrow company. In some cases, a brokerage trust account or a closing attorney may hold the funds. Your contract should name the holder and outline the instructions for deposit and release.
Timing and delivery
Most contracts require a deposit within a set window after acceptance, often 24 to 72 hours. You will usually deliver funds via wire transfer or cashier’s check, following escrow instructions. Always confirm exact deadlines and delivery details in your contract.
Documentation you should keep
Request a written receipt from the escrow holder when you deposit funds. Make sure the purchase agreement references the deposit and explains how it will be applied at closing. Keep all communications and confirmations in writing.
Contingencies that protect your deposit
Contingencies are conditions that must be met for the sale to proceed. If you terminate within the agreed window and follow notice procedures, your earnest money is typically refundable.
- Inspection contingency: Typically a 5 to 14 day window, with 7 to 10 days common. You can cancel within this period if the contract allows and receive a refund.
- Financing contingency: If you cannot secure loan approval by the deadline and you give notice properly, your deposit is generally returned.
- Appraisal contingency: If the home does not appraise at the purchase price and your contract includes an appraisal contingency, you can terminate and recover funds.
- Title contingency: If title issues cannot be cured per the agreement, you may terminate and get your deposit back.
- Sale-of-home contingency: If your purchase depends on selling another property, the contingency must be written into the contract.
Refunds, forfeiture, and deadlines
If you terminate within a valid contingency period and deliver the required written notice on time, you typically receive a refund. If you miss a deadline or default without a contractual excuse, the seller may have the right to keep your deposit as liquidated damages, depending on the contract. Some agreements allow the seller to seek other remedies, which may include specific performance or damages. Your exact outcome will depend on the contract language and any dispute procedures it contains.
Competitive strategies in Kalispell
You can present a compelling offer without taking on unnecessary risk. Consider these approaches:
- Increase the deposit amount but keep key contingencies. A larger sum signals strength while protections stay in place.
- Shorten, but do not eliminate, contingency timelines. For example, tighten inspection to 7 days if you can get vendors on site quickly.
- Use a neutral title company as the escrow holder. Many sellers prefer a third-party holder.
- Provide proof of funds or a strong preapproval with your offer. This supports your financing contingency and increases confidence.
- Structure deposit stages. You can propose an initial deposit at acceptance and a second deposit after inspection to show commitment with defined risk.
- Make nonrefundability clear and limited. If any portion becomes nonrefundable after a milestone, spell out exactly when and why.
Buyer checklist before you send funds
- Confirm the amount and how you will fund it. Line up a wire or cashier’s check and verify bank limits and timing.
- Get the exact deposit deadline in your contract. Put reminders on your calendar.
- Name the escrow or title company in the agreement. Request written wiring instructions and a deposit receipt.
- Write contingencies clearly with deadlines. Include inspection, financing, appraisal, title, and any sale-of-home needs.
- Understand termination procedures. Know how to deliver written notices on time and who must receive them.
- Plan for documentation. Keep copies of inspection objections, loan denial letters, and any notices.
Contract phrases to discuss with your agent
- “Earnest money in the amount of $____ to be deposited with [named escrow/title company] within [X] business days of acceptance.”
- “Buyer’s earnest money shall be refundable if Buyer validly terminates under the inspection contingency, financing contingency, appraisal contingency, or title contingency as set forth in this Agreement, provided Buyer timely delivers written termination notice in accordance with the Agreement.”
- “If Buyer fails to deliver required deposit by the date specified, Seller may treat Buyer’s failure as a default and pursue remedies as provided in this Agreement.”
Review all language with your agent and, when appropriate, a Montana-licensed real estate attorney.
What happens in a dispute
Disagreements often center on whether a contingency was exercised properly or on time. Many contracts call for mediation or arbitration before litigation. Some agreements include a liquidated damages clause that lets the seller keep the deposit as the sole remedy for a buyer breach. If a dispute arises, consult your agent, the escrow officer, and a Montana real estate attorney for next steps.
Local guidance you can trust
You deserve a clear plan for your deposit and a confident offer strategy tailored to Kalispell and the Flathead Valley. Our team prioritizes careful drafting, timeline management, and proactive communication so you can compete without unnecessary risk. If you are planning a purchase, connect with Sandra West to align your deposit strategy with your goals.
FAQs
How much earnest money should a Kalispell buyer expect on a $700,000 home?
- Many buyers offer 1 to 3 percent of the price, which is roughly $7,000 to $21,000, but amounts can be higher in competitive situations.
When is earnest money typically due after an offer is accepted in Montana?
- Contracts commonly call for deposit within 24 to 72 hours of acceptance, but the exact deadline is set by your agreement.
Who usually holds earnest money in Flathead County?
- A local title or escrow company typically holds the funds, though a brokerage trust account or attorney may be named in the contract.
Is earnest money refundable if the appraisal comes in low?
- It is generally refundable if your contract includes an appraisal contingency and you terminate within the required timeline using proper written notice.
Can your earnest money be applied to closing costs at settlement?
- Yes, if the sale closes, your deposit is usually credited toward your down payment and closing costs as outlined in the contract.
