Buying your first home in Dayton can feel exciting and a little overwhelming. One topic that often raises questions is earnest money. You want to write a strong offer without risking more than you need to. In this guide, you’ll learn what earnest money is, how much buyers in Montgomery County typically put down, when you can get it back, and practical steps to protect your deposit. Let’s dive in.
What is earnest money?
Earnest money is a good‑faith deposit you pay when you make an offer. It shows the seller you are serious about buying the home. At closing, the deposit is credited toward your cash due, often your down payment or closing costs. It is separate from other costs like inspection or appraisal fees.
Your purchase contract spells out who holds the funds, how and when they are applied at closing, and what conditions allow a refund. The deposit is part of your legally binding agreement, so the exact terms matter.
How earnest money works in Dayton
In the Dayton area, the escrow holder is usually a title or escrow company that will handle your closing. Sometimes a brokerage or an attorney holds the deposit in a trust account. Ohio rules govern how client funds are held, recorded, and disbursed.
You should receive written confirmation that shows the amount, the date the money was received, and the name of the escrow holder. Keep this receipt with your contract documents. At closing, your earnest money appears as a credit on the settlement statement.
How much to offer in Montgomery County
There is no fixed amount set by law. In practice, amounts in the Dayton region usually fall into a few common patterns:
- Lower price ranges: many buyers use a flat deposit, often $1,000 to $2,500.
- Higher price points: a percentage is common, often 1 to 2 percent of the purchase price.
- Examples: for a $150,000 home, 1 percent is $1,500. For a $300,000 home, 1 percent is $3,000. In a competitive situation, buyers sometimes increase the deposit to strengthen the offer.
Choose an amount that fits your budget and reflects the competitiveness of the listing. Your agent can help you balance a strong offer with smart risk management.
When you pay and who holds it
Your contract sets the deadline for delivering earnest money. In many Ohio transactions, funds are due upon acceptance or within 24 to 72 hours after the seller signs. The contract should clearly name the escrow holder, often the title company that will close the transaction.
Ask for written instructions on how to deliver the deposit, such as a wire, certified funds, or a check. Confirm the escrow account details directly with the holder and keep a receipt.
Contingencies that protect your deposit
Contingencies are contract clauses that let you cancel and recover your earnest money if certain conditions are not met within set timeframes. Your refund rights depend on the exact wording and timing in your contract.
Inspection contingency
- Purpose: lets you complete professional inspections and request repairs or cancel.
- Typical period: commonly 7 to 14 calendar days from acceptance, set in your offer.
- Refund: if you cancel within the inspection window and follow notice rules in the contract, you generally receive a full refund.
Financing contingency
- Purpose: protects you if your lender cannot approve your loan on time.
- Typical period: often 21 to 30 days, depending on the lender and contract.
- Refund: if you apply promptly, act in good faith, and receive a written denial within the contingency timeline, you can usually cancel and recover your deposit.
Appraisal contingency
- Purpose: covers you if the property appraises below the contract price.
- Options: renegotiate, bring additional cash, or cancel if your contract allows.
- Refund: if you cancel under an appraisal contingency per the contract, your deposit is typically refunded. If you waive this contingency, you take on the shortfall risk.
Title review
- Purpose: allows you to review the title report and require issues to be cleared.
- Refund: if title defects are not cured within the contract timeline and you cancel per the terms, your deposit is typically refunded.
Sale‑of‑home contingency
- Purpose: used if you need to sell your current home to buy the next one.
- Refund: if your home does not sell within the timeline and you cancel as allowed, you generally receive a refund. Some sellers are less willing to accept this contingency.
When your earnest money is at risk
After you remove contingencies or miss deadlines, your ability to cancel and keep your deposit becomes limited. If you back out without a contractual reason after protections expire, the seller may be entitled to keep the deposit, and some contracts allow additional remedies. The exact outcome depends on the contract language.
If there is a disagreement about who should receive the deposit, many Ohio contracts call for dispute resolution steps. Escrow holders may require joint written instructions or ask a court to decide before releasing funds.
Steps to protect your deposit
Use these practical strategies to keep your earnest money safe:
- Put details in writing. Make sure your offer states the deposit amount, the escrow holder, where the funds will be applied, and the delivery deadline.
- Set realistic deadlines. Choose inspection and financing periods that match your home and lender timeline. For older homes, consider adding time for specialized inspections such as radon, sewer scope, or structural reviews.
- Move quickly with your lender. Apply right away and provide documents promptly. If financing is denied, get a written denial to support a refund under your contingency.
- Be cautious about waiving protections. Waiving inspection, appraisal, or financing protections can make your deposit nonrefundable if you later cancel.
- Prefer a neutral escrow holder. Many Dayton buyers use a title or escrow company to hold the deposit, which can reduce confusion and disputes.
- Follow notice rules exactly. Deliver any cancellation or repair notices as your contract requires, and before deadlines. Keep proof of delivery.
- Understand dispute language. Review the contract’s escrow instructions and dispute clauses so you know how funds will be released if there is a conflict.
- Seek help early if issues arise. Contact your agent, the escrow holder, and an attorney if you anticipate a dispute.
Local notes for Dayton buyers
Dayton’s housing market can vary by neighborhood and price point. Some listings receive multiple offers, while others see more balanced activity. In competitive areas, sellers may prefer larger deposits and shorter timelines.
Agents here commonly use Ohio and Miami Valley REALTORS forms. Standard language covers earnest money, contingency periods, and notice methods, but your agent will tailor amounts and deadlines to your situation.
Typical local timelines include 7 to 14 days for inspections, 21 to 30 days for loan approval, and 30 to 45 days to close. Homes in older neighborhoods may call for extra inspection items. In certain areas, floodplain questions may require additional review. At closing, Montgomery County property tax proration appears on your settlement statement, and your earnest money is credited toward your total due.
Quick checklist before you submit an offer
- Choose a deposit amount that fits your budget and market conditions.
- Name the title or escrow company in the contract and confirm delivery instructions.
- Set inspection and financing timelines you can meet.
- Plan any specialized inspections you may need.
- Apply with your lender right away and save all correspondence.
- Do not waive protections without understanding the risk.
- Track every deadline and follow notice procedures exactly.
Ready to move forward with a confident plan? For calm, clear guidance and local know‑how, connect with Michele Hines to talk through your offer strategy and deposit protections.
FAQs
How much earnest money do Dayton buyers usually put down?
- In lower price ranges, many buyers use $1,000 to $2,500, while higher price points often see deposits around 1 to 2 percent of the purchase price.
When do I pay earnest money in an Ohio purchase?
- Your contract sets the deadline, often upon acceptance or within 24 to 72 hours, and the funds go to the named escrow holder.
Who holds my earnest money in Montgomery County?
- Usually a title or escrow company handles the deposit, though a brokerage or attorney trust account can hold it if the contract specifies.
Can I get my deposit back if the inspection goes poorly?
- If your offer includes an inspection contingency and you cancel within the inspection window using the contract’s notice method, you generally receive a full refund.
What proof do I need if my loan is denied?
- Keep a written lender denial and documentation that you applied promptly and acted in good faith within the financing contingency timeline.
What happens if the appraisal is low?
- If you have an appraisal contingency, you may renegotiate, bring extra cash, or cancel per the contract, which typically results in a deposit refund.
Can I lose earnest money if I change my mind after deadlines?
- Yes, canceling without a contractual reason after contingencies expire can put your deposit at risk, and the seller may be entitled to keep it.
