You want your offer to stand out in Scottsdale, but you also want to protect your money. That is exactly where earnest money comes in. It shows sellers you are serious while giving you a clear path to get your deposit back if the contract allows. In this guide, you will learn how much to put down, when to pay it, how contingencies work, and what happens if a deal falls through in Scottsdale.
Let’s dive in.
What is earnest money in Scottsdale?
Earnest money is a good-faith deposit you deliver after your offer is accepted. In Arizona, it is usually held by the escrow or title company named in your purchase contract. If you close, it gets credited toward your down payment and closing costs. If the sale cancels, what happens to the deposit depends on the contract and the reason for cancelation.
The standard Arizona purchase contract includes sections on earnest money, escrow handling, and dispute resolution. Escrow holders must follow Arizona rules for trust funds and can only release funds based on the contract or mutual instructions from both parties.
How much should you offer?
In typical Scottsdale and Phoenix-area transactions, buyers commonly offer about 1% to 3% of the purchase price. In a competitive situation, you may see 3% to 5% or more. For lower-priced homes or softer markets, flat-dollar deposits like $1,000 to $3,000 sometimes work if the seller agrees. There is no fixed legal percentage, so your amount is negotiable.
Scottsdale examples by price
- $300,000 purchase: 1% is $3,000, 2% is $6,000, 3% is $9,000.
- $600,000 purchase: 1% is $6,000, 2% is $12,000, 3% is $18,000.
- $1,500,000 purchase: 1% is $15,000, 2% is $30,000, 3% is $45,000.
Scottsdale has both entry-level and luxury segments. For mid-priced homes, 1% to 2% is often enough. In high-demand neighborhoods or luxury sales, larger deposits and sometimes non-refundable terms are used to strengthen an offer. Any non-refundable terms must be clearly written in the contract.
When you pay it and who holds it
Your contract will state how quickly you must deliver the funds. A common timeline is within 1 to 3 business days after acceptance, though the exact timing is negotiable. If a buyer misses the agreed timeline without the seller’s consent, that can be a breach.
The escrow or title company named in the contract holds the deposit in a trust account and follows the contract’s instructions. You will receive wiring or delivery instructions directly from escrow. Always confirm wire instructions by calling the title company at a known phone number before sending any funds. This protects you from wire fraud.
How contingencies protect your deposit
Contingencies are your safety net. If you cancel within a contingency period as allowed by the contract, your earnest money is typically refundable. Common protections include:
- Inspection contingency. You can investigate the home and request repairs or cancel within the inspection period if the property does not meet your expectations.
- Financing contingency. If you cannot secure your loan under the contract terms and cancel as the contract allows, your deposit is generally protected.
- Appraisal contingency. If the home does not appraise at the agreed value and you cancel within the allowed timeframe, your deposit is usually refundable.
Watch your dates closely. Missing a deadline can put your deposit at risk even if the reason for canceling is valid. Put reminders on your calendar and respond in writing before the deadline.
When earnest money can be non-refundable
Sometimes buyers offer non-refundable or partially non-refundable deposits to stand out, especially on luxury or highly competitive listings. If you consider this, make sure the terms are clearly spelled out. The contract should state exactly how much is non-refundable, when it becomes non-refundable, and what credit you receive at closing. Only offer non-refundable money if you understand the risks and are confident in your financing and due diligence.
If a deal cancels: what happens next
- Buyer cancels within a valid contingency. If you cancel on time under inspection, appraisal, financing, or other allowed terms, you are generally entitled to a refund of your earnest money. The escrow holder needs mutual written instructions or a contract-based directive to release funds.
- Buyer defaults after contingencies. If you fail to close without a contractual right to cancel, the seller may elect to keep the deposit as liquidated damages, or pursue other legal remedies. The exact remedy depends on the contract language.
- Seller defaults. If the seller does not meet obligations such as delivering clear title, you may be entitled to a return of your deposit and potentially other remedies based on the contract.
- Escrow disputes. If buyer and seller disagree about the funds, the escrow company will usually hold the money until both sides agree or a court or arbitrator directs a release. This process can take time, so clear documentation and communication are important.
Tips to protect your earnest money
- Use clear contingencies. Include inspection, financing, and appraisal protections with specific deadlines. Know the cutoff times and act before they pass.
- Balance amount and risk. Offer enough to be competitive, but do not risk funds you cannot afford to lose if you choose to remove contingencies early.
- Put details in the contract. Name the escrow/title company, the deposit amount, delivery method, and the timeline. Avoid verbal side agreements.
- Verify wire instructions. Call the escrow company using a phone number from a trusted source to confirm wiring details.
- Keep receipts and confirmations. Save your executed contract and your escrow deposit confirmation.
- Clarify any non-refundable terms. If any portion is non-refundable, spell out the conditions in writing.
Seller strategies that work
- Ask for a meaningful deposit. Larger deposits can deter weak offers and signal buyer commitment.
- Define remedies and deadlines. Make sure the contract is clear about what happens if the buyer does not perform and when key approvals are due.
- Choose a reputable escrow holder. A well-known title or escrow company with local Scottsdale experience helps reduce friction and keeps funds secure.
Quick Scottsdale buyer checklist
- Decide your earnest money amount based on price and competitiveness.
- Name the escrow or title company in the offer and set a deposit timeline.
- Include inspection, financing, and appraisal contingencies with firm deadlines.
- Clarify if any portion is non-refundable and when that applies.
- Confirm wire instructions by phone before sending funds.
- Get a deposit receipt and keep a copy with your contract.
- Track deadlines and act in writing before they expire.
Common mistakes to avoid
- Missing deadlines. Even one missed day can put your deposit at risk.
- Wiring without verification. Always call the escrow company to verify instructions.
- Over-committing funds. Do not offer a large non-refundable amount without a clear plan and confidence in financing.
- Vague contract terms. Ambiguity creates disputes. Keep terms clear and written.
Work with a team that watches every detail
Your earnest money is one of the first financial decisions you make after an accepted offer. The right strategy can help you win the home and protect your funds. If you want help tailoring your deposit amount, structuring contingencies, or navigating escrow in Scottsdale, our team is here to guide you from offer to close with clear, step-by-step advice.
Connect with The Bole Group | Real Broker for local, practical support on your next move.
FAQs
What is earnest money in Scottsdale real estate?
- It is a good-faith deposit you pay after your offer is accepted, held by a title or escrow company and credited to your costs at closing.
How much earnest money is typical in Scottsdale?
- Many buyers offer about 1% to 3% of the price, and competitive or luxury sales may see 3% to 5% or more depending on the situation.
Is earnest money refundable in Arizona?
- If you cancel within permitted contract contingencies and deadlines, your deposit is typically refundable according to the contract terms.
How soon do I need to deposit earnest money after acceptance?
- Many contracts set delivery within 1 to 3 business days after acceptance, though the exact timing is negotiable and must be in the contract.
Who holds my earnest money in Scottsdale?
- The title or escrow company named in your contract holds it in a trust account and releases funds based on contract instructions.
Can a seller keep my earnest money if I cancel?
- If you cancel without a contractual right or after removing protections, the seller may be able to keep the deposit or pursue other remedies under the contract.
How do I avoid wire fraud when sending earnest money?
- Call the escrow or title company at a verified number to confirm wire instructions, and never rely solely on email details.
