Worried you could lose your deposit on a Riverside County home? You are not alone. Earnest money can feel confusing, especially when every day and detail matters once your offer is accepted. The good news is you can protect your money and still write a strong offer. This guide explains how earnest money works in Riverside County, what is typical, and the exact steps to keep your deposit safe while staying competitive. Let’s dive in.
What earnest money is
Earnest money is a deposit you include with an accepted offer to show good faith. It tells the seller you are serious. If your purchase closes, the deposit is credited to your down payment or closing costs.
It is not the same as your down payment. Think of it as your reservation funds that become part of your final payment at closing.
If you default after removing your contingencies, the seller may be entitled to keep your deposit as damages, depending on the contract.
Where deposits are held in California
In California, your earnest money is usually held in an escrow company’s trust account or a broker’s trust account, as written in your purchase agreement. Escrow companies are regulated in California and hold client funds in fiduciary accounts. For consumer protection details, see the California Department of Financial Protection and Innovation’s overview of escrow practices, including licensing and trust accounts. Review DFPI’s overview of escrow law before wiring funds.
Always request a written receipt that shows the amount received, the date, and your escrow number. Keep this with your records.
How much to expect in Riverside County
There is no fixed amount. In Southern California, many buyers offer a flat dollar amount or a percentage of the price. A common range is a few thousand dollars up to about 1 to 3 percent of the purchase price. Lower-priced homes may see smaller flat deposits. Higher-priced listings often see deposits that scale with price.
Market conditions matter. In competitive submarkets, buyers may increase their deposit and shorten contingency timelines to stand out. If your strategy is value-first, you might keep contingencies and use a modest deposit, backed by strong preapproval and proof of funds.
When your deposit is refundable
Your deposit is typically refundable while your contingencies are active and you follow the contract rules. Common protections include:
- Inspection contingency. You can cancel within the inspection window and recover your deposit if you follow notice procedures.
- Appraisal contingency. If the appraisal is low and you do not reach a new agreement, you can cancel within the contingency period and recover your deposit.
- Loan contingency. If financing does not come through despite good-faith effort, you can cancel within the contingency period and recover your deposit.
If the seller fails to perform under the contract, you may also be entitled to a return of your funds.
When your deposit can be forfeited
Once you remove all contingencies in writing, your deposit will usually become nonrefundable. If you choose not to close after that point, the seller may keep your deposit as liquidated damages if the contract allows. Read your purchase agreement carefully and follow every deadline.
Key timelines in Riverside County contracts
Your purchase agreement controls the dates. Common checkpoints include:
- Initial deposit deadline. Due upon acceptance or within a short, negotiated timeframe. The contract names who receives the funds and how they are delivered.
- Escrow open and instructions. After acceptance, escrow opens and issues an escrow number and wiring or delivery instructions.
- Inspection period. You complete inspections, review disclosures, and either proceed, request repairs or credits, or cancel within the agreed window.
- Contingency removals. You remove contingencies in writing. Keep copies and confirm receipt by the listing agent and escrow.
- Closing. Your earnest money applies to the amount due at closing.
Tip: Get every contingency removal and any cancellation in writing. Confirm receipt with both the listing agent and escrow to avoid disputes.
REO and HUD homes: what to expect
REO and government-owned properties often have stricter rules for deposits and timelines.
- REO (bank-owned) listings. Asset managers may require certified funds, proof of funds with offers, and higher deposits. Timelines are often rigid. Expect limited flexibility on repairs and contingency windows.
- HUD homes. HUD sales use specific bidding rules and earnest money procedures via HUD Homestore. Review HUD’s guidance on buying a HUD home before you bid. Certified funds and strict submission deadlines are common.
For both, follow deposit instructions precisely. Use the escrow details provided in the signed contract or HUD instructions, and keep copies of your receipts.
How to deliver earnest money safely
Wire fraud is a real risk during deposit and closing. Protect yourself with simple steps:
- Verify wiring instructions by phone using a trusted number from your agent, the escrow officer’s business card, or the escrow company website. Do not rely on phone numbers or links within a new or suspicious email.
- If instructions change, stop and re-verify by calling escrow directly.
- Prefer a cashier’s check or a verified wire to the exact account listed in your escrow instructions.
For more safety tips, review the FBI’s guidance on business email compromise and the FTC’s advice on preventing real estate wire fraud.
A quick buyer checklist
Use this list to protect your deposit on a Riverside County home:
- Confirm a competitive, comfortable deposit amount with your agent.
- Get full preapproval and proof of funds before you write.
- Read your contract for the deposit recipient, method, and deadline.
- Deliver funds by the deadline and get a written receipt and escrow number.
- Keep contingencies until you are satisfied with inspections, appraisal, and loan approval.
- Put all contingency removals and notices in writing and confirm receipt by escrow and the listing agent.
- Verify the escrow company and wiring details. Review DFPI’s escrow guidance and call escrow to verify instructions.
- Keep organized records of all emails, receipts, inspection reports, and notices.
Ways to strengthen your offer without extra risk
You can improve your chances without overexposing your deposit:
- Present strong financing. A complete preapproval and proof of funds can make a modest deposit more acceptable.
- Offer a flexible closing date. Align your timing with the seller’s needs.
- Keep reasonable contingency periods. Shorten only if you and your lender can meet them.
- Clarify your repair approach. Signal willingness to focus on major health and safety items only, if that fits your risk tolerance and the property.
Only increase your deposit if you understand the risk and can keep needed protections in place.
Local guidance that blends value and compliance
If you are targeting a value buy or navigating an REO or HUD listing in Riverside County, experience matters. Our team handles traditional sales and institutional assignments across Southern California, including HUD and bank-owned homes. We bring process discipline, clear communication, and practical advice to protect your deposit while keeping your offer competitive.
Ready to talk strategy or get next steps tailored to your budget and timeline? Connect with Misael Vasquez. Hablamos Español.
FAQs
How does earnest money work for Riverside County buyers?
- It is a good-faith deposit that sits in escrow and is credited to your down payment or closing costs at closing.
How much earnest money should I plan for?
- Many Southern California offers range from a few thousand dollars to about 1 to 3 percent of the price, adjusted for competition and price point.
When is my earnest money refundable?
- While contingencies like inspection, appraisal, and loan are active, you can usually cancel per contract and recover your deposit.
What happens if I cancel after removing contingencies?
- The seller may keep your deposit as liquidated damages under the contract if you do not close after removing protections.
Who holds my deposit in California?
- An escrow company or a broker’s trust account holds funds per the contract. Escrow should issue a receipt and an escrow number.
What is different about REO or HUD deposits?
- Expect stricter rules, certified funds, rigid timelines, and specific procedures. Review HUD’s buying guidance for HUD homes and follow escrow instructions exactly.
