Wondering how much earnest money you need to compete in Mamaroneck or the Sound Shore? In Westchester, this deposit shows you are serious and can influence whether your offer is accepted. With clear expectations, you can plan cash needs and protect your funds from day one. Here is how earnest money works locally and how to use it with confidence. Let’s dive in.
Earnest money basics
Earnest money is a good-faith deposit you put down when your offer is accepted. It is credited to you at closing and goes toward your down payment and closing costs. It is not a separate fee.
Sellers request a deposit to discourage casual offers and to gain some security if a buyer walks away after removing contingencies. The contract of sale spells out the deposit amount, who holds it in escrow, when it is released, and any remedies like a liquidated damages clause.
Typical amounts in Mamaroneck
In Westchester, including Mamaroneck and nearby Sound Shore communities, deposits commonly fall within a 1% to 3% range in balanced markets. In multiple-offer situations, buyers sometimes offer 3% to 5% or higher to strengthen an offer. Co-ops or higher-value listings can require larger deposits in some cases, sometimes 5% to 10%, depending on building policies and seller expectations.
Here are simple examples:
- $500,000 purchase: 1% is $5,000; 3% is $15,000; 5% is $25,000.
- $800,000 purchase: 1% is $8,000; 3% is $24,000; 5% is $40,000.
Deposit levels vary with local market conditions, the property type, and the strength of your financing and contingencies. Plan for earnest money on top of your lender down payment and closing costs. Because prices run higher than the national median, even 1% can be several thousand dollars.
When you pay and who holds it
Most deposits are due when the contract is fully executed or within a short window set in the contract, commonly 24 to 72 hours. Confirm your exact timeline in writing so you are ready to move funds quickly.
Attorney-held escrow is the norm in Westchester and across New York. Your deposit is usually delivered to the seller’s attorney or listing attorney per the contract. Broker escrow accounts are possible in some cases, but attorney escrow is more common.
Certified bank checks, cashier’s checks, and wire transfers are standard. Some attorneys may accept a personal check with the contract, but certified funds are typical. Get a written receipt that shows the amount, date, payor, and the named escrow holder.
Ask how interest is handled. Some escrow accounts do not credit interest to individual clients, while others may under certain conditions. Your attorney can explain how their account operates.
Be alert to wire fraud. Always verify wiring instructions directly with your attorney or brokerage office using a trusted phone number. Never rely only on email instructions.
Refunds, contingencies, and risks
Contingencies are your safety net. Common ones include financing, inspection, appraisal, and title. If you cancel within a valid contingency period as set in the contract, your deposit is typically refundable.
If the seller breaches the contract, such as being unable to deliver marketable title or failing to meet agreed terms, you may be entitled to your deposit back and potentially other remedies. If you default after removing contingencies, the seller may keep the deposit as liquidated damages if that clause exists and is enforceable.
If there is a dispute over release of funds, the escrow holder will usually hold the deposit until both parties reach a written agreement or a court directs the release. Many contracts outline how the escrow holder should proceed in a dispute.
Co-op and condo specifics
Co-ops often include building riders that affect deposit handling and timing. Some transactions hold funds until board approval. If a co-op board rejects your application, release and timing rules follow the language in the contract and co-op rider. Review these documents closely with your attorney.
Buyer checklist
Before you make an offer:
- Talk with your real estate attorney about who will hold escrow and the accepted form of payment.
- Set up certified funds or wire capability for the expected range, often 1% to 3% in typical conditions.
- Confirm how you will verify wire instructions by phone or in person.
At acceptance and contract signing:
- Deliver your deposit promptly within the contract window, often 24 to 72 hours.
- Obtain a written receipt from the escrow holder showing the amount, date, payor, and release instructions.
- Keep a copy of the executed contract that names the escrow holder and details release terms.
Contract terms to confirm with your attorney:
- Exact deposit amount and how it applies at closing.
- Identity of the escrow holder and instructions for deposit release.
- Contingency timelines for inspection, appraisal, financing, and title.
- Whether there is a liquidated damages clause and what it means for you.
- Any co-op or condo riders that may affect deposit handling.
If you plan to raise your deposit to compete:
- Review your exposure with your attorney before increasing. A larger deposit raises your risk if contingencies are removed.
If something goes wrong:
- Keep written records of notices like inspection results, financing denials, or title issues.
- Contact your attorney before instructing an escrow release or taking any step that could forfeit your deposit.
Strengthen your offer safely
You can show commitment without taking on unnecessary risk. Consider increasing your deposit within your comfort level while keeping key protections in place. Shortening contingency periods can help in some cases if your attorney agrees and you are prepared to meet the deadlines. Balance competitiveness with safeguards that match your finances and timeline.
Common mistakes to avoid
- Sending a wire without confirming instructions by phone with a known office number.
- Missing contingency or deposit deadlines listed in your contract.
- Assuming a personal check is acceptable when certified funds or a wire is required.
- Not knowing who holds escrow or how funds are released if a dispute arises.
Your next step
Getting earnest money right can help you win a home and protect your funds in Mamaroneck and the Sound Shore. If you want local guidance on deposit strategy, contingencies, and timing, reach out for a tailored plan. Connect with Stephen Mele to talk through your goals and next steps.
FAQs
What is earnest money in a Westchester home purchase?
- It is a good-faith deposit credited to you at closing that shows seriousness and is governed by your contract’s escrow and release terms.
How much earnest money should a Mamaroneck buyer expect?
- Typical ranges are 1% to 3% in balanced markets, with 3% to 5% or higher in competitive situations, and sometimes higher for co-ops or higher-value listings.
When is earnest money refundable in New York transactions?
- It is generally refundable if you cancel within a valid contingency period, such as financing, inspection, appraisal, or title, as defined in your contract.
Who usually holds earnest money in Westchester?
- Attorney escrow is customary, with the deposit often held by the seller’s attorney or listing attorney as named in the contract.
How soon do I need to deliver the deposit after acceptance?
- Most contracts require the deposit upon full execution or within 24 to 72 hours, so be ready with certified funds or a verified wire.
What happens to earnest money at closing?
- It is applied to your down payment and closing costs, reducing the remaining funds you need to bring to the closing table.
