Writing an offer on a Sunnyvale home? Your earnest money deposit is one of the first signals sellers use to gauge how serious you are. If you are buying for the first time or relocating, the numbers can feel big and the rules confusing. In this guide, you will learn what earnest money is, common deposit amounts in Sunnyvale, how the funds are held, when they are refundable, and smart ways to stay competitive without taking on unnecessary risk. Let’s dive in.
What earnest money is
Earnest money, also called an earnest money deposit or EMD, is your good‑faith deposit submitted with an accepted offer. If you close, it is applied to your down payment or closing costs.
In California, your deposit is governed by the purchase contract, escrow instructions, and state escrow and trust laws. Most buyers use the California Association of Realtors Residential Purchase Agreement, which sets the deposit amount, delivery deadline, contingencies, and remedies if either party defaults. A neutral escrow or title company holds the funds until closing or cancellation.
Key contract elements include:
- Deposit amount and where it is delivered
- Delivery deadline, often 24 to 72 hours after acceptance
- Contingency periods for inspection, loan, appraisal, and title
- An optional liquidated damages clause that can limit the seller’s remedy to the deposit if the buyer defaults
Typical deposit sizes in Sunnyvale
Nationally, deposits often run 1 to 3 percent. In Sunnyvale and other Santa Clara County markets, price points are higher and competition can be intense, so deposits often scale up.
- Slower periods or lower‑priced condos: about 5,000 to 15,000 dollars, or around 1 percent on lower price points.
- Typical Sunnyvale single‑family home: a 1 to 3 percent baseline is common. Many sellers expect 20,000 to 50,000 dollars or more based on price.
- Very competitive situations: 3 to 5 percent or higher to signal strength. On a 1.5 million dollar home, 1 percent is 15,000 dollars and 3 percent is 45,000 dollars. On a 2.5 million dollar home, 3 percent is 75,000 dollars.
Sellers often favor larger deposits when there are multiple offers or when you are shortening contingencies. Backup offers may use a smaller initial deposit with an increase due at acceptance or before contingency removal.
Quick math for local prices
- 1.2 million dollars at 2 percent: 24,000 dollars
- 1.8 million dollars at 3 percent: 54,000 dollars
- 2.2 million dollars at 2.5 percent: 55,000 dollars
Always budget your deposit alongside inspection fees, appraisal, and closing costs.
How deposits are held and protected
In California, a neutral escrow or title company holds your funds in a trust or escrow account. If a broker takes the deposit first, it must be placed in a trust account and delivered to escrow per law and brokerage policy.
Ask your escrow officer how funds are held, whether the account is FDIC‑insured, and how you will receive receipts and confirmations. Escrow will only disburse funds according to the contract or written instructions signed by both parties, or by court or arbitrator order.
Delivery and timing
- Delivery is commonly due within 24 to 72 hours of acceptance. Check your contract.
- At closing, the deposit is applied to your down payment or closing costs.
- If you cancel under a valid contingency, the deposit is typically returned after proper instructions are signed.
Safety steps to avoid fraud
- Verify wiring instructions by calling a known number for your escrow officer before sending funds.
- Use traceable methods and keep wire confirmations or check copies.
- Confirm the escrow company’s licensing and request a deposit receipt right away.
When your deposit is refundable
Your earnest money is typically refundable when you cancel within valid contingency periods. Common examples include inspection findings during the inspection window, a low appraisal when you have an appraisal contingency, loan denial when you have a loan contingency and acted in good faith, or clear title issues.
If the seller materially breaches the contract, you can usually cancel and seek a refund or other remedies per the agreement.
When you could forfeit it
You risk losing your deposit if you fail to close without a contractual right to cancel, or if you remove contingencies and then walk away for a reason not protected by the contract. Keep in mind that escrow does not release funds automatically. If the seller disputes the release, the deposit may remain in escrow until both parties sign instructions or a mediator, arbitrator, or court directs disbursement.
Liquidated damages and contingencies
The Residential Purchase Agreement includes an optional liquidated damages clause. If selected by both parties, it can limit the seller’s damages to the deposit amount if the buyer defaults. That can protect you from larger claims, but it also puts your deposit at risk if you breach after removing protections.
Contingencies are your safety valves. Instead of waiving them entirely, you can shorten contingency periods to show confidence while maintaining protection. Always understand the deadline and what is required to remove each contingency in writing.
Smart strategies to stay competitive
You want to look strong without adding unnecessary risk. In Sunnyvale, small adjustments can matter.
- Scale your deposit to the listing’s competitiveness: start with 1 to 3 percent and adjust up when multiple offers are likely.
- Pair a strong deposit with standard protections: keep inspection, loan, and appraisal contingencies, but consider shorter timelines to compete.
- Define clear deposit timing: offer delivery within 24 to 48 hours and show proof of funds to strengthen credibility.
- Consider a staged deposit: smaller up front with an increase due after acceptance or upon contingency removal, as negotiated.
- Use non‑refundable funds sparingly: if used at all, time a small non‑refundable portion after inspections. Do this only if you fully understand the risk.
- Address liquidated damages thoughtfully: limiting remedies to the deposit can cap exposure if things go wrong.
How Jane structures deposits
Baseline offer: recommend 1 to 3 percent scaled to price. Increase modestly on in‑demand listings to stand out without over‑committing.
Competitive tweak: present a 2 to 3 percent deposit with shorter but realistic contingency periods. Provide proof of funds and a delivery plan to escrow within 24 to 48 hours.
Escalation scenario: when prices may climb, pair a slightly higher deposit with clear contingency deadlines so you remain protected.
Backup position: use a smaller initial deposit that increases promptly upon moving to primary position.
Documentation and safety: confirm escrow details, verify wire instructions by phone, and secure immediate receipts for all transfers.
Step‑by‑step checklist
- Before you offer
- Decide how much deposit you are comfortable putting at risk if you later remove contingencies.
- Verify available cash for deposit, inspections, appraisal, and closing costs.
- Discuss local escrow practices and the chosen escrow company with your agent.
- When your offer is accepted
- Confirm the exact deposit deadline and delivery method in writing.
- Wire funds only after confirming instructions by phone with escrow.
- Obtain and save your deposit receipt.
- During escrow
- Track contingency deadlines and what is needed to remove each one.
- Understand if and when any portion of your deposit becomes non‑refundable.
- Keep all records: offers, counters, addenda, wire confirmations, and emails with escrow.
Final thoughts and local guidance
In Sunnyvale’s fast market, your deposit is both a signal of strength and a financial safeguard. The right size depends on the property, offer terms, and how much risk you are prepared to take. With clear timelines, verified escrow steps, and a plan for contingencies, you can protect your funds and compete with confidence.
Have questions about structuring a winning offer in Sunnyvale? Reach out to Jane Dew Real Estate to discuss your goals and deposit strategy. Schedule a personalized consultation.
FAQs
How much earnest money do Sunnyvale buyers usually put down?
- A common baseline is 1 to 3 percent of the purchase price, adjusted higher on very competitive listings.
How soon after acceptance do I deliver my deposit in California?
- Many contracts set delivery within 24 to 72 hours after acceptance, but always follow your specific agreement.
Is my earnest money held in an FDIC‑insured account?
- Not automatically. Ask your escrow officer how funds are held and whether the account is FDIC‑insured.
When is my deposit refundable if my loan is denied?
- If you have a loan contingency and cancel within that period due to a good‑faith loan denial, the deposit is typically refundable.
What if the seller refuses to release my deposit after I cancel?
- Escrow usually needs mutual written instructions. If there is a dispute, parties may use mediation, arbitration, or court orders for disbursement.
Can a larger deposit help me win a Sunnyvale bidding war?
- Yes, larger deposits can signal strength, especially with shorter but reasonable contingency periods.
Are non‑refundable deposits common in Sunnyvale?
- They appear in ultra‑competitive cases but are used selectively due to higher risk. Understand the exposure before agreeing.
