Are you wondering how earnest money deposits actually work when you buy a home in Long Beach? You are not alone. The deposit is a small part of the process that carries real weight, especially in neighborhoods like Bixby Knolls in 90807. In this guide, you will learn what an earnest money deposit is, how much buyers typically put down, what protects your deposit, and when you can expect a refund. Let’s dive in.
What is earnest money in California
An earnest money deposit, often called an EMD, is a buyer’s good faith deposit submitted with an offer to purchase a home. It is not an extra fee. It is credited toward your purchase at closing, along with your down payment and closing funds.
In California, the purchase contract sets the rules for the deposit. Most residential deals use the California Association of Realtors Residential Purchase Agreement. The contract spells out the amount, due date, who holds the funds, and what happens if either party defaults.
Who holds it and when it is due
Your deposit is typically placed with the escrow holder or title company. Escrow acts as a neutral third party and holds the funds in a trust account until the sale closes or the contract is canceled.
Delivery of the initial deposit is a contract item. Many offers call for delivery within a short window after acceptance, often 24 to 72 hours, but the exact timing is what you and the seller agree to in writing. Some contracts also include an additional deposit due later. Always get a written escrow receipt to document delivery.
Typical deposit amounts in 90807
Across California, a common initial deposit range in normal conditions is about 1 to 3 percent of the purchase price. In hot, multiple-offer situations, buyers sometimes offer 2 to 5 percent or more to signal strength.
In Bixby Knolls and nearby Long Beach neighborhoods, the right amount depends on the property’s price point, how competitive the listing is, and seller expectations at the time. If a home is drawing several offers, a larger deposit can help your offer stand out. Your agent will calibrate the deposit size to the listing’s dynamics and your risk tolerance rather than a one-size-fits-all number.
Key contingencies that protect you
Contingencies are the contract protections that keep your deposit safe when used correctly. The contract sets the number of days for each one and the exact steps to cancel.
Inspection contingency
During your investigation period, you can inspect and review disclosures. If you cancel within this live contingency and follow contract procedures, your deposit is generally refundable.
Loan contingency
If you cannot obtain financing and cancel within the loan contingency period, the deposit is typically refundable when you provide any required lender documentation and proper notice.
Appraisal contingency
If the appraisal comes in below the contract price and you have an appraisal contingency, you can cancel and receive the deposit back unless you and the seller agree on a different solution, such as a price change or you bringing in additional funds.
Title and legal items
If title review reveals an unresolvable issue, the contract usually allows cancellation with a return of the deposit. Always provide notices in writing by the stated deadlines.
Refund and forfeiture scenarios
Deposit outcomes depend on contract language, contingency status, and timely notices. Here are common scenarios and typical results:
Canceling during a live inspection contingency
If you cancel while the inspection contingency is still in place and follow the steps in the contract, you usually receive a full refund of your deposit.
Loan denial within the loan contingency window
If financing is denied and you cancel properly within the loan contingency period, the deposit is typically refunded.
Appraisal shortfall options
With an appraisal contingency, a low appraisal allows you to cancel and recover the deposit. Without this contingency, canceling may put the deposit at risk.
Canceling after removing contingencies
Once you remove contingencies, canceling later can lead to deposit forfeiture. Many contracts include a liquidated damages option that, if selected, outlines the seller’s remedy. Discuss the consequences before you remove protections.
If the seller defaults
If the seller cannot perform or breaches the agreement, buyers are usually entitled to a return of the deposit. If there is a dispute, escrow will follow written instructions or wait for a legal decision.
“Non-refundable” terms in multiple offers
Some sellers request stronger or partially non-refundable deposits. These clauses carry added risk and must be drafted clearly. Understand what you are agreeing to before accepting non-refundable terms.
How escrow releases the deposit
Escrow can only release the deposit based on written, matching instructions from both parties or a court or arbitration order. If the buyer and seller disagree about who is entitled to the funds, escrow will hold the deposit until there is a mutual agreement or a legal determination. Some escrow holders may file an interpleader so a court can decide.
Timeline snapshot in Long Beach
Every contract is unique, but here is how timing usually lines up:
- Offer accepted: parties open escrow and set contingency deadlines.
- Initial deposit: delivered to escrow by the contract deadline, often within 24 to 72 hours.
- Contingency periods: inspection, loan, and appraisal time frames are set in the contract and require written notices to cancel.
- Close of escrow: the full escrow period is contract specific, and many local escrows run about 30 to 45 days depending on financing and negotiations.
Remember, time is of the essence. Missing a deadline or failing to deliver a required notice can put your deposit at risk.
Buyer checklist for 90807 offers
Use this quick list before you write an offer in Bixby Knolls:
- Confirm the deposit amount and exact delivery deadline in your signed offer.
- Ask escrow for a written receipt after you deliver the deposit.
- Track each contingency deadline and know the correct way to cancel in writing.
- Get a strong loan pre-approval to support your offer without adding risk to your deposit.
- Discuss deposit size and contingency strategy with your agent for each listing, especially in multiple-offer situations.
- Understand the risk before you waive contingencies or agree to any non-refundable deposit terms.
How a local agent helps
A skilled Long Beach agent helps you choose the right deposit size, track deadlines, and keep your options open while staying competitive. You get guidance on contingency strategy, realistic timelines, and how to document delivery and notices so your rights are protected.
If you are preparing to buy in Bixby Knolls or another Long Beach neighborhood, schedule a quick 10 to 15 minute consult to talk through deposit strategy and contingencies before you tour or submit an offer. For calm, education-first representation and premium service, connect with Dharmesh Tailor.
FAQs
What is an earnest money deposit in a California home purchase?
- It is a buyer’s good faith deposit held by escrow and credited to your purchase at closing, with refund rights set by your contract and contingencies.
How much earnest money is typical in 90807 Long Beach?
- Many offers use about 1 to 3 percent of the price; competitive listings may see 2 to 5 percent or higher based on demand and seller expectations.
When is the deposit due after offer acceptance in California?
- The contract controls the deadline. Many deals call for delivery to escrow within 24 to 72 hours, but always follow your signed agreement.
Can I get my earnest money back if my loan is denied?
- Yes, if you cancel within the loan contingency period and provide any required lender documentation as the contract requires.
What happens if I remove contingencies and then cancel?
- Your deposit is often at risk of forfeiture, and the seller may have remedies such as liquidated damages. Get guidance before removing protections.
Who decides when escrow releases the deposit?
- Escrow releases funds only with matching written instructions from both parties or a legal order; disputes can require mediation, arbitration, or court.
