Ever wondered how much earnest money you should offer on a Lusby home, or what happens to that deposit if things go sideways? You are not alone. Earnest money can feel confusing, especially the first time you write an offer. In this guide, you will learn what earnest money is, how it works in Maryland, typical ranges for Calvert County, and how to protect your deposit with smart contingencies and timing. Let’s dive in.
Earnest money basics
Earnest money is a good-faith deposit you put down when a seller accepts your offer. It shows you are serious and gives you certain contract rights while you complete inspections, secure financing, and move toward closing.
- It is a credit, not a fee. At closing, your deposit is applied to your down payment or closing costs.
- Whether it is refundable depends on the contract and your timely use of contingencies.
- In Maryland, title companies, settlement companies, or attorneys typically hold the deposit in an escrow or trust account.
How it protects both sides:
- For sellers, it adds security and may compensate them if a buyer breaches the contract without a right to cancel.
- For buyers, it takes the home off the market while you complete inspections and financing, and it gives you defined exit rights when allowed by the contract.
Practical steps:
- Make your check payable to the title or settlement company, or attorney escrow account. Do not make it out to the seller or your agent.
- Delivery can be a personal or cashier’s check, or a verified wire transfer. Keep wire-fraud risks in mind.
- Always keep a written receipt that shows the amount, date, and escrow holder.
Typical amounts in Lusby
Earnest money is commonly set as a percentage of price or a flat amount. In many markets, including Southern Maryland, typical ranges are:
- Entry-level homes under roughly 300,000 dollars: often 1,000 to 5,000 dollars.
- Mid-range homes: about 1 to 2 percent of the purchase price.
- Highly competitive or higher-priced listings: 2 to 3 percent or more.
Your amount should reflect local supply and demand, the property condition, your financing, and whether multiple offers are likely. In hot segments of the Lusby market, you may choose a stronger deposit to stand out, but remember that larger deposits increase your risk if you default later.
When you get it back
Your deposit is typically refundable if you cancel within the contract terms using a contingency. Common protections include:
- Home inspection contingency and timely notice during the inspection period.
- Financing or mortgage contingency if you cannot obtain the loan despite good-faith effort.
- Appraisal contingency if the appraisal does not support the price and the lender cannot approve without changes.
- Title contingency for serious title problems.
- Sale-of-home contingency in select cases.
- Local protections that matter in Calvert County, such as septic inspection results, well water testing, floodplain considerations, or Chesapeake Bay Critical Area approvals when applicable.
The key is timing. Your Maryland purchase agreement has clear deadlines and notice requirements. If you act within the allowed timeframes and follow the notice steps, you generally preserve the right to a refund.
When it may be forfeited
Your earnest money can be at risk if you breach the contract without a right to cancel. Examples include missing deadlines, waiving contingencies and later backing out, or failing to close after removing protections.
- Many Maryland contracts allow the seller to keep the deposit as liquidated damages if the buyer defaults and there is no contingency to rely on.
- If the contract does not include a liquidated damages clause, a seller may pursue other remedies. Forfeiture is not automatic, and outcomes depend on the contract and local practice.
When in doubt, stay ahead of your dates, communicate early, and document everything in writing.
How escrow and disputes work
Escrow holders often need written instructions from both parties to release the deposit. If the parties disagree, the escrow holder may keep funds in the account until there is written agreement, or seek a court process to resolve competing claims.
- Keep your inspection, financing, and appraisal timelines organized to avoid disputes.
- If a conflict arises, notify your agent and consider legal guidance right away so you can protect your position.
Local Lusby considerations
Calvert County properties come with a few local factors that can impact your timelines and contingencies:
- Septic systems and well water: Many homes rely on septic and private wells. Plan for septic inspections, well testing, and time to review any available county health department records.
- Flood zones: Waterfront and near-water properties may be in FEMA flood zones. Confirm whether flood insurance is required and how that affects your budget.
- Chesapeake Bay Critical Area: Some properties fall inside this regulated area. If you plan future changes like docks, shoreline work, or significant landscaping, confirm rules and approvals early.
- HOA or condo documents: Build in time to review HOA rules and financials where applicable. Maryland contracts typically allow a review period for these documents.
Your step-by-step checklist
Before you write an offer
- Get a solid pre-approval, not just pre-qualification.
- Ask your agent for recent Lusby comps and advice on a competitive deposit amount and contingency periods.
- Consider property-specific risks, such as septic, well, floodplain, or Critical Area needs, and tailor contingencies to the home.
When placing earnest money
- Make the deposit payable to the title or settlement company, or the attorney holding escrow.
- If wiring funds, verify instructions by calling the escrow holder using a known phone number. Do not rely on a link in an email.
- Get a written receipt within 48 to 72 hours. Save copies of the check or wire confirmation.
Inspection, financing, and timing
- Typical inspection periods locally are about 7 to 14 days, sometimes longer for rural properties that need septic or percolation steps.
- Lenders often need 21 to 45 days for loan processing, depending on loan type. Set realistic financing dates.
- Appraisal timing depends on the lender. Ask your lender how soon the appraisal can be ordered and completed.
If problems arise
- Send notices within the deadlines in your contract. Timely notice preserves your refund rights under contingencies.
- If a seller disputes the refund, contact your agent and consider legal guidance. The escrow holder usually needs written instructions from both sides.
Wire fraud caution
- Always confirm wire instructions by phone with the escrow holder using a verified number. Fraud attempts are common in real estate, so slow down and double check.
Strategies for competitive markets
If you expect multiple offers, you can strengthen your position without losing sight of risk:
- Choose a deposit amount that signals commitment while matching your comfort level and financial plan.
- Keep essential protections, such as financing and appraisal, unless your lender and risk tolerance fully support a different approach.
- Set tighter but realistic timelines for inspections and loan milestones to show the seller you will move efficiently.
- Communicate clearly in your offer who will hold the deposit, when it will be delivered, and how fast you will meet each milestone.
Sample timeline you can adapt
Here is a simple, buyer-friendly schedule you can tailor with your agent and lender:
- Day 0 to 1: Offer accepted. Deliver earnest money to the named escrow holder and get a receipt.
- Day 1 to 3: Schedule general home inspection, septic inspection, well testing, and any specialized inspections.
- Day 7 to 14: Complete inspections and deliver any repair requests or cancellation notice within the inspection period if needed.
- Day 7 to 21: Lender orders appraisal and you provide all requested documents quickly.
- Day 21 to 45: Financing approval window, depending on loan type. Track appraisal results and underwriting conditions.
- Closing day: Earnest money is applied to your closing costs or down payment.
Bottom line for Lusby buyers
Your earnest money is a small part of your total cash to close, but it carries big importance in how your contract works. The right deposit, paired with clear contingencies and on-time communication, can help you secure the home you love while protecting your funds. If you are eyeing a property in Lusby or anywhere in Calvert County, a local plan built around septic and well timelines, possible flood risks, and realistic lending dates will set you up for success.
If you want a clear, local plan for your next offer, reach out to Amber Verdadero for guidance tailored to Southern Maryland.
FAQs
What is earnest money in Maryland real estate?
- It is a good-faith deposit held by a title company, settlement company, or attorney and credited to your cash to close if you make it to settlement.
How much earnest money do Lusby buyers usually put down?
- Many buyers offer 1 to 3 percent of price, with entry-level homes often 1,000 to 5,000 dollars and higher amounts in competitive situations.
Is earnest money refundable after a home inspection in Maryland?
- Yes, if your contract includes an inspection contingency and you cancel or resolve issues within the allowed timeline and notice steps.
Who holds the deposit in Calvert County transactions?
- A title company, settlement company, or attorney typically holds funds in an escrow or trust account, not the seller or your agent.
What happens to my deposit if financing falls through?
- If you have a financing contingency and you act in good faith but cannot obtain the loan, you usually receive a refund when you follow notice rules.
Can I wire earnest money safely?
- Yes, if you verify instructions by phone with the escrow holder using a known phone number and ignore any last-minute email changes.
What local issues can affect my timelines in Lusby?
- Septic and well testing, potential FEMA flood zone requirements, and Chesapeake Bay Critical Area rules can require extra time and care.
When can a seller keep my earnest money?
- If you default without a contingency to rely on or miss critical deadlines, the contract may allow the seller to keep the deposit as liquidated damages.
