Earnest Money in San Francisco: What Buyers Should Know

Are you getting ready to write an offer in San Francisco and wondering how much earnest money to put down? You are not alone. The deposit is a small part of your total funds, but it carries real risk if the deal goes sideways. In this guide, you will learn how deposits work in San Francisco, what amounts are typical, when funds are refundable, and how to protect yourself from common mistakes. Let’s dive in.

Earnest money basics in San Francisco

Earnest money is the good‑faith deposit you deliver to escrow after your offer is accepted. It shows commitment and is held in a neutral escrow account until closing or cancellation. If the sale closes, the deposit is credited to your down payment or closing costs.

Escrow and title companies serve as neutral custodians. They follow written instructions and will not release funds without the required authorizations from both parties or a court order. The purchase contract, typically based on California Association of Realtors forms, governs timing, contingencies, and how funds are handled.

Typical deposit amounts in SF

In many San Francisco transactions, buyers offer around 1% to 3% of the purchase price as the initial deposit when the market is calmer. In competitive, multiple‑offer situations, buyers often raise deposits to 3% to 5% or more to signal strength. All‑cash or very aggressive offers may go higher.

How much you choose depends on price point, competitiveness, and your personal risk tolerance. Larger deposits look strong to a seller, but they also raise your exposure if you default after removing contingencies.

Quick math examples

• $1,200,000 condo
  • 1% deposit: $12,000
  • 3% deposit: $36,000
• $2,000,000 single‑family home
  • 1% deposit: $20,000
  • 5% deposit: $100,000

These are illustrative examples. The right amount for you depends on current market conditions and how you plan to structure your contingencies.

Timing and how to deliver funds

Most offers specify delivery of the initial deposit within a short window after acceptance, often between 24 and 72 hours. Some offers also include a second, supplemental deposit that becomes due when you remove contingencies. Your offer should spell out exact amounts and timing.

Escrow typically accepts wires or cashier’s checks. Personal checks may be accepted but must clear. Always follow escrow’s published instructions and confirm wiring details by phone using a trusted number to avoid fraud. Ask escrow for written confirmation that funds were received so you have a clear record.

Contingencies and deposit protection

Contingencies are conditions that must be met for the sale to proceed. Common examples include inspection, loan, appraisal, and title. While your contingencies are active and you follow the contract timelines, your deposit is generally refundable if you cancel for a reason allowed by the contract.

If you remove a contingency in writing, you give up that layer of protection. From that point, if you default, your deposit may be at risk. To preserve your rights, send all notices on time and keep records of communication and reports.

When your deposit is at risk

Your deposit becomes exposed once you waive or remove contingencies and then fail to perform. For example, if you remove your loan and appraisal contingencies and later cannot close, the seller may have grounds to keep your deposit under the contract’s liquidated damages provisions.

If there is a dispute about who is entitled to the deposit, escrow will hold funds until both parties sign a mutual release or a court order directs disbursement. Escrow will not unilaterally release contested funds.

How releases and cancellations work

If both sides agree to cancel, escrow will ask for a signed mutual release that also directs how the deposit should be disbursed. Once escrow receives a properly executed release, the company processes the disbursement within its internal timelines.

If the parties cannot agree, the money stays in escrow until the dispute is resolved through mediation, arbitration, or court. This process can take weeks or months, so timely documentation and clear communication are essential.

Smart strategies for SF buyers

• Right‑size the deposit for the market. In a competitive setting, you may offer more to stand out, but do not deposit more than you can afford to have at risk if problems arise after you remove contingencies.
• Consider a two‑step structure. A modest initial deposit can be followed by a supplemental deposit when you remove contingencies. This shows good faith while limiting early exposure.
• Be precise in your offer. Spell out the amounts, due dates, and conditions for any second deposit tied to contingency removal.
• Protect your funds in transit. Use verified wiring instructions and confirm by phone. Save your deposit receipt from escrow.
• Track every deadline. Put inspection, appraisal, loan, and title dates on a shared calendar with reminders.
• Keep a paper trail. Save inspection reports, appraisal results, lender communications, and any notices delivered to the seller.
• Ask for help when stakes are high. Lean on your agent for timing and risk trade‑offs. If a dispute arises, consider legal counsel.

Real‑world SF scenarios

• Multiple offers. You raise your deposit from 2% to 4% and shorten the inspection period to compete. This can help your offer stand out, but you must be ready to act fast on inspections and loan approvals.
• Appraisal shortfall. If you waived your appraisal contingency and the valuation comes in low, you may need to bring in extra cash to close or risk default and losing your deposit.
• Inspection negotiations. You find issues and ask for a credit. If the seller declines and you cancel within the inspection period per the contract, your deposit is typically refundable.
• Loan denial. If you diligently pursue financing and are denied during the loan contingency period, you can usually cancel and receive your deposit back, subject to the contract’s documentation requirements.
• Delayed closing. If closing is delayed but the transaction completes, your deposit is credited toward your funds due at closing.

Quick reference checklist

• Deliver the initial deposit within the timeframe stated in your contract.
• If wiring funds, confirm instructions by calling escrow at a trusted number.
• Use cashier’s check or wire for speed and certainty when possible.
• Get a written deposit receipt from escrow.
• Calendar all contingency deadlines and send notices on time.
• Keep copies of inspections, lender updates, appraisal results, and any cancellation or contingency removal forms.

Final thoughts

Your earnest money is both a signal of strength and a source of risk in a San Francisco offer. The key is to balance deposit size and contingency strategy with your financing, cash reserves, and comfort level. When in doubt, structure your deposit in steps, keep your paperwork tight, and act early on inspections and loan tracking. A clear plan helps you compete while protecting your funds.

If you want a deposit strategy tailored to your price point, financing, and target neighborhood, connect with our team for a one‑on‑one plan. Request a tailored consultation with Ryan Richard.

FAQs

Is earnest money refundable in San Francisco?

• Yes, if you cancel within active contingency periods and follow the contract’s notice and documentation requirements; once you remove contingencies, your deposit is more exposed.

How much earnest money do buyers typically put down in SF?

• Many offers use 1% to 3% as an initial deposit; in competitive situations, 3% to 5% or more is common, depending on price point and buyer risk tolerance.

When is the deposit due after my offer is accepted?

• Most contracts call for delivery to escrow within a short window, often 24 to 72 hours after acceptance, with any supplemental deposit due when you remove contingencies.

Who holds my earnest money and how is it applied?

• A neutral escrow or title company holds the funds in trust and applies them to your down payment or closing costs at closing, or returns them per the contract if you cancel properly.

What happens if my appraisal is low?

• If you kept your appraisal contingency, you can seek a price adjustment or cancel per the contract; if you waived it, you may need to bring extra cash or risk default and losing your deposit.

Can the seller keep my deposit if my loan is denied?

• If you diligently pursued financing and are denied within the loan contingency period, the deposit is usually returned; if you waived or removed that contingency, the seller may have grounds to keep it.

What if buyer and seller disagree about the deposit?

• Escrow will hold the funds until both parties sign a mutual release or a court order directs disbursement; disputes may go to mediation or arbitration per the contract.