Jeni VanOrnum | Real Estate Insights & Education

Earnest money confuses many first-time homebuyers. I’m Jeni VanOrnum, your Douglas County real estate agent, explaining everything you need to know about earnest money deposits in 2024.

What Is Earnest Money?

Earnest money is a good faith deposit showing sellers you’re serious about purchasing their home. It’s not an extra cost—it applies toward your down payment and closing costs. Think of it as holding your spot while completing inspections, appraisals, and financing.

Typical Amounts in Douglas County

In Douglas County, earnest money typically ranges from 1-2% of purchase price. On a $400,000 home, expect $4,000-$8,000. In competitive situations, buyers sometimes offer 3-5% to strengthen their position, though this is less common in the current balanced market.

When You Pay

You deliver earnest money within days of contract acceptance (typically 3 business days). It’s deposited with a neutral title company or escrow holder—never given directly to sellers. The title company holds it in a trust account until closing.

How You Pay

Earnest money requires a cashier’s check, wire transfer, or personal check (which must clear before the deadline). Personal checks delay the process, so cashier’s checks or wires are preferred. Have these funds readily available before making offers.

Protecting Your Earnest Money

Colorado contracts include contingencies protecting your deposit. During the inspection period (typically 7-10 days), you can terminate for any reason and receive your earnest money back. If the appraisal comes in low and you can’t reach agreement, you get your deposit back. If your financing falls through (within the financing deadline), your earnest money is returned.

When You Lose Earnest Money

You forfeit earnest money if you terminate outside contingency periods without valid reason, fail to complete financing requirements on time due to your inaction, or refuse to close after all contingencies are satisfied. Following timelines and working with an experienced agent prevents these situations.

At Closing

Your earnest money is credited toward your down payment and closing costs. If your earnest money was $5,000 and your total cash to close is $50,000, you’ll bring $45,000 to closing.

Get Expert Guidance

Ready to make your first offer on a Douglas County home? Contact Jeni VanOrnum today. I’ll help you determine appropriate earnest money amounts and protect your deposit.