Wondering how much earnest money you need when you write an offer in Westwood? If you are preparing for your first or next purchase, the deposit can feel confusing and high stakes. In a town where well-priced homes move quickly, you want a clear plan that protects your money and strengthens your offer. In this guide, you will learn what earnest money is in Massachusetts, typical deposit amounts in Westwood, how refunds work, who holds your funds, and practical steps to reduce risk. Let’s dive in.
What earnest money means in Massachusetts
Earnest money, also called a deposit, is a good-faith payment you submit with your offer to show serious intent to buy. If the sale closes, the deposit is applied to your down payment or closing costs. In Massachusetts, the deposit is governed by your written Purchase and Sale Agreement and state contract law.
Your contract spells out the deposit amount, who holds it, when it is refundable, and what happens if either party breaches. Many Massachusetts contracts include a liquidated damages clause that lets the seller keep the deposit if a buyer defaults, subject to legal standards and the specific terms of your agreement.
Typical deposit sizes in Westwood
Across many Massachusetts suburbs, deposits of 1% to 3% of the purchase price are common. In competitive or higher-demand situations in and around Boston, buyers sometimes offer 3% to 5% or more to stand out. Westwood is an affluent, commuter-focused market with periods of limited inventory, so deposits often trend toward the higher end on attractive listings.
Because Westwood prices are often above state medians, even standard percentages can mean larger dollar amounts. Here are illustrative examples to help you plan:
- 1% on a $700,000 home: $7,000
- 2% on a $900,000 home: $18,000
- 3% on a $1,000,000 home: $30,000
What influences your deposit
- Competition and multiple offers
- Seller preferences for deposit size
- Your financing type and contingency strategy
- Property type and condition
- Your personal risk tolerance if you are considering waiving contingencies
When earnest money is refundable
Refunds depend on the contingency language in your contract and whether you meet all notice and timing requirements. Common Massachusetts contingencies that can protect your deposit include:
- Inspection and due diligence, such as home, septic, lead paint, or condo documents
- Financing or mortgage commitment by a set date
- Appraisal, if the value does not support the purchase price
- Title, if defects cannot be cured
- Sale-of-home, which is less common in competitive settings
Timing matters. Your Purchase and Sale Agreement sets specific deadlines for each contingency. You must deliver written notices, waivers, or termination by the stated dates to preserve refund rights.
Buyer breach versus valid termination
If you terminate properly under a contingency and follow the contract’s notice rules, your deposit is typically refunded. If you fail to close without a permitted termination, the seller may seek to retain the deposit under a liquidated damages clause or pursue other legal remedies, depending on the contract.
Who holds your deposit in MA
In Massachusetts, deposits are commonly held in escrow by the seller’s attorney. They may also be held by the listing broker’s or buyer’s broker’s trust account, or by the buyer’s attorney if negotiated. The escrow holder provides a written receipt and holds the funds according to the disbursement instructions in your contract.
Attorney escrow accounts are client trust accounts governed by professional conduct rules. Funds are safeguarded, kept separate from operating accounts, and disbursed only under the conditions stated in your Purchase and Sale Agreement or upon a written agreement or court order.
Buyer protections in escrow
- Obtain a written escrow receipt showing the amount, who holds it, and release conditions
- Confirm clear disbursement instructions in your Purchase and Sale Agreement
- Understand whether the account is interest-bearing and who receives any interest, if applicable
How to size and structure your deposit
Start with local norms. In Westwood, a common starting point is 1% to 3% of the price, adjusted for how competitive a listing is. Consider the seller’s signals, such as days on market or recent price changes. Weigh the trade-off between a larger deposit that makes your offer stronger and the increased funds at risk if you waive protections.
Cash buyers sometimes use smaller deposits but may waive financing contingencies. If you are financing, be thoughtful about preserving protections that matter to you, especially if you are sensitive to appraisal or lending risk.
Structuring the deposit
Some buyers split the deposit into stages. You can submit a smaller amount with the initial offer and add funds upon execution of the Purchase and Sale Agreement. This approach reduces your immediate outlay while still signaling commitment.
In a hot market, you may see appraisal-gap strategies paired with larger deposits to show you will cover some or all of a shortfall. This can be effective, but it increases your at-risk funds if other protections are waived. Consider your comfort level and speak with a Massachusetts real estate attorney if you have questions.
Contract language to protect you
- Build realistic timelines for inspections, mortgage commitment, appraisal, and title review
- Specify how and to whom written termination notices must be delivered
- Clarify whether liquidated damages are the seller’s sole remedy or if additional remedies apply
- Name the escrow holder and set clear disbursement instructions, including what happens in a dispute
Paperwork and deadlines checklist
- Copy of the accepted offer and Purchase and Sale Agreement showing deposit terms
- Written escrow receipt with account holder and contact information
- Proof of funds transfer, such as a cancelled check or wire confirmation
- A deadlines calendar for contingencies and required notices
What to do if there is a problem
If an issue arises, contact your attorney and your agent right away. Keep copies of all emails, notices, and proof that you met deadlines. If there is a dispute about who is entitled to the deposit, the funds will usually remain in escrow while the parties resolve the issue or seek legal guidance.
Local insight for Westwood buyers
On well-priced and renovated homes in Westwood, you may be competing with other serious buyers. Plan to have your deposit funds liquid and ready so you can act quickly. Consider deposits toward the higher end of local norms when competition is strong, and be sure your contingency timelines are realistic for inspections and mortgage approval.
If you are weighing a larger deposit or changes to contingencies, review the trade-offs with your agent and a Massachusetts real estate attorney. A balanced approach can help you stay competitive without putting more funds at risk than you intend.
Ready to compete with confidence?
You deserve a clear strategy for deposit size, contingencies, and timing. If you want a second set of eyes on your offer plan or need help calibrating your deposit to the Westwood market, reach out to Marilyn Freedman for tailored guidance.
FAQs
What is earnest money in a Massachusetts home purchase?
- It is a good-faith deposit submitted with your offer that applies to your closing funds if the transaction completes, governed by your Purchase and Sale Agreement.
How much earnest money do buyers typically put down in Westwood, MA?
- Many buyers start around 1% to 3% of the price, with 3% to 5% or more in competitive cases, adjusted for listing strength and your risk tolerance.
When can I get my earnest money back if I buy in Massachusetts?
- If you terminate properly within your contract contingencies and deliver timely written notice, your deposit is typically refundable under the agreement.
Who usually holds the earnest money deposit in Westwood transactions?
- The seller’s attorney commonly holds funds in escrow, though a broker’s trust account or the buyer’s attorney may hold them if agreed in the contract.
What happens to my deposit if I fail to close without a valid contingency?
- The seller may seek to keep your deposit under a liquidated damages clause or pursue other remedies, depending on the contract terms and circumstances.
Can I split my deposit into an initial check and a second payment at the Purchase and Sale Agreement stage?
- Yes, staged deposits are common and can reduce your upfront outlay while still signaling commitment; ensure the structure and timelines are clear in the contract.
