What is earnest money?

Earnest money is a deposit you make when you enter into a purchase and sale agreement to show the seller that you are serious about buying the home. In Washington, that money is typically held by an escrow agent, title company, or other authorized holder and is generally applied toward your purchase price at closing.

Why Do Buyers Pay Earnest Money?

When you make an offer on a home in Tacoma, Bremerton, Gig Harbor, Port Orchard, or elsewhere in the Pacific Northwest, the seller wants to know that you intend to follow through.

Earnest money helps demonstrate that commitment.

It is not an additional cost on top of your purchase price. If your transaction successfully closes, your earnest money is generally credited toward the purchase price or other amounts due at closing.

Think of it as money you put toward the transaction while demonstrating that you are entering the agreement in good faith.

How Does Earnest Money Work in Washington?

The specific terms are established in your purchase and sale agreement. Under the commonly used Washington purchase agreement, earnest money is delivered after mutual acceptance according to the timeline specified in the agreement.

The money is then held by the designated holder rather than simply being handed over to the seller.

This is important because earnest money isn't automatically the seller's money. What happens to it depends on the purchase agreement, including any applicable contingencies and termination provisions.

Can You Get Your Earnest Money Back?

This is one of the most important questions for Washington buyers.

Sometimes, yes—but it depends on the terms of your contract and the circumstances of the transaction.

For example, your purchase agreement may contain contingencies that provide you with specific rights to terminate the agreement and recover your earnest money if the required conditions aren't satisfied. Washington REALTORS® specifically advises buyers to understand how inspection, appraisal, and financing contingencies affect the transaction.

On the other hand, if you fail to complete the purchase without a contractual or legal excuse, your earnest money could be at risk. Washington law permits certain written agreements to provide for forfeiture of earnest money as liquidated damages, subject to statutory requirements and limits.

That's why you should never assume your earnest money is automatically refundable.

How Much Earnest Money Should You Put Down?

There isn't one amount that applies to every Washington home purchase.

The amount can be part of the negotiation between you and the seller and may vary depending on the property, transaction, and terms of the offer.

Rather than choosing an amount simply because you've heard that it's "standard," talk with your REALTOR® about how the deposit fits into your particular offer and financial situation.

What Washington Buyers Should Remember

If you're buying a home in Tacoma, Bremerton, Gig Harbor, Port Orchard, or another PNW community, keep these points in mind:

• Earnest money shows your good-faith intention to complete the purchase.

• It is generally credited toward the purchase price when you close.

• The funds are held by a designated third party rather than automatically going to the seller.

• Your contract and its contingencies help determine whether you can recover the deposit.

• Missing contractual deadlines or failing to perform can put your earnest money at risk.

Most importantly, read the purchase agreement before you sign it and make sure you understand what you're agreeing to.

Final Takeaway

So, what is earnest money? It's a deposit that demonstrates your commitment to purchasing a home. For Washington buyers, understanding how that deposit works—and how your purchase agreement and contingencies affect it—can help you make more informed decisions throughout the home-buying process.

Whether you're looking in Tacoma, Bremerton, Gig Harbor, or Port Orchard, having a clear understanding of earnest money is an important part of preparing to make an offer.

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