Earnest Money in Boston: What Buyers Should Know

Buying a home in Boston means moving quickly and putting real money on the line. That first check or wire can feel risky when you’re still doing inspections and waiting on your lender. You deserve clarity on how earnest money works here, what’s normal, and how to keep your deposit safe. In this guide, you’ll learn typical amounts in Boston, when deposits are due, who holds them, what happens if contingencies fail, and a simple checklist to protect your funds. Let’s dive in.

Earnest money basics in Massachusetts

Earnest money is your good‑faith deposit that shows a seller you are serious. It is part of your funds for closing and is credited toward your down payment and closing costs if the sale completes.

In Massachusetts, there is no statute that sets a required amount. Earnest money is governed by your Purchase & Sale Agreement, which sets deadlines, contingencies, remedies, and where the funds are held. The P&S also clarifies what conditions allow you to recover the deposit and what happens if you default after removing protections.

Many standard Massachusetts contracts include language stating that if a buyer defaults after contingencies are removed, the seller may keep the deposit as liquidated damages. Exact outcomes depend on the contract and your compliance with its terms, so do not assume an automatic refund outside stated contingencies.

Typical amounts in Boston

Condos and entry properties

For many Boston condos and lower‑priced units, local practice often uses modest flat deposits. It is common to see several thousand dollars, with practical ranges frequently around 2,500 to 10,000 dollars. Actual amounts vary by building, price point, and competitiveness.

Single‑family and higher‑priced homes

For single‑family homes and higher‑priced listings, deposits are often framed as a percentage of the purchase price. A common starting point is about 1% to 3%. In competitive situations, some buyers increase deposits to 3% to 5% or more to stand out.

New construction or luxury

For new construction and luxury transactions, deposits can be materially larger and may be scheduled in stages. Your agreement might call for an initial deposit with the offer and additional deposits at later milestones.

Market conditions matter

In a strong seller’s market with multiple offers, buyers often raise deposits, shorten deadlines, and limit contingencies to stay competitive. In a softer market, you may be able to use smaller deposits and longer, more protective timelines.

When you pay the deposit

Initial deposit timing

In Boston, it’s common to submit the initial deposit with your offer or within a short window after acceptance, often within 24 to 72 hours. Your Purchase & Sale Agreement will specify the exact timing and how the funds must be delivered.

Common contingency windows

Inspection periods are often 5 to 14 days from acceptance, depending on the property and how competitive your offer needs to be. Financing contingency periods commonly range from 21 to 45 days to secure your mortgage commitment. Title and condominium document review periods typically run 7 to 14 days, and can extend if significant issues appear.

Closing timeline

Most Boston closings occur 30 to 60 days after acceptance, but timing depends on lender processing, seller needs, and the contract you negotiate.

Who holds your funds

Common escrow holders

Your deposit is usually held in a trust (escrow) account. In Massachusetts, the holder is often the listing broker, your attorney or the seller’s attorney, or a title or closing company. The contract should identify the escrow agent and include instructions for disbursement.

Receipts and security

Always get a written receipt and contact information for the escrow holder. Keep confirmations that your funds were received. If you wire funds, independently verify wiring instructions by calling a known phone number for the escrow holder. Do not rely solely on email to avoid wire fraud.

Contingencies and refunds

If contingencies fail

If a contingency is not satisfied or waived in time, the contract usually gives you the right to terminate and recover the deposit, provided you follow the exact notice method and deadline stated in the agreement. This commonly applies to inspection, financing, title issues, and condo‑document review. If a sale‑of‑home contingency is included and you cannot sell in the agreed period, you can typically terminate and obtain a refund per the contract.

After protections are removed

Once you waive a contingency or miss a deadline, your deposit is more at risk. If you later cannot close, the seller may be entitled to keep your deposit as liquidated damages, according to the contract language. This is a key reason to be careful about shortening timelines or waiving protections.

If there is a dispute

If a seller contests a termination, they may refuse to release the deposit. Disputes are resolved by negotiation, mediation, arbitration, or court litigation depending on the contract. Detailed documentation of your timely notices and efforts is essential.

Protect your deposit

Before you offer

• Get a written mortgage pre‑approval to strengthen your position and your financing contingency.
• Speak with a Massachusetts real estate attorney early to review the Purchase & Sale Agreement and escrow provisions.
• Align your strategy with the market. If a neighborhood is very competitive, you may need a stronger deposit or shorter periods. If not, keep protections.

In your contract

• Specify the escrow holder in the Purchase & Sale Agreement.
• State delivery timing and acceptable forms clearly, such as certified check or wire.
• Spell out inspection, financing, title, and condo‑document review periods, along with the exact form and deadline for any termination notice.
• Add or accept “time is of the essence” language only after discussing its impact with your attorney.

Documentation to keep

• A dated receipt or confirmation from the escrow holder that funds were received.
• Any inspection reports, lender denial letters, and emails supporting a contingency‑based termination.
• Copies of termination notices and proof of delivery sent before the deadline.

Fraud prevention

• Confirm wiring instructions by phone using a verified number for the escrow holder.
• Do not wire funds to any account unless the instructions are verified and expected by your attorney or closing company.

Real Boston scenarios

Example A: Inspection discovery

You offer on a Back Bay condo with a 7‑day inspection period and deposit 5,000 dollars. The inspection uncovers major structural concerns. You terminate in writing within the period per the contract, and your deposit is refunded.

Example B: Financing after waiver

In a multiple‑offer situation for a single‑family in Jamaica Plain, you waive the financing contingency to compete and later cannot secure a mortgage. Under many Massachusetts contracts, the seller can keep the deposit as liquidated damages and may consider other remedies depending on the agreement.

Example C: Short timelines to win

You increase your deposit to 3% and shorten the inspection period to 3 days to beat other offers on a Newton home. You schedule the inspection immediately upon acceptance and move quickly to preserve your rights within the deadline.

Get local guidance

Every Boston purchase is a mix of contract details, market conditions, and timing. The right deposit and the right protections depend on your property type, price point, and competition on the listing. A concise plan with clear contingency windows and a trustworthy escrow path will protect your funds and keep your offer competitive.

If you prefer Mandarin service, our bilingual team will explain each term clearly and coordinate attorneys, lenders, and inspectors so you can move fast without sacrificing protection. Ready to craft an offer strategy that keeps your deposit safe? Connect with the Grace Harbor Team to Get a Full Valuation from a Local Expert and a game plan tailored to Boston’s market.

FAQs

What is earnest money in a Massachusetts home purchase?

• It is a good‑faith deposit that shows seriousness, is defined by the Purchase & Sale Agreement, and is credited toward your closing if the deal completes.

How much earnest money is typical in Boston today?

• Many condos use flat deposits around 2,500 to 10,000 dollars, while single‑family and higher‑priced homes often see 1% to 3% and sometimes 3% to 5% in competitive bids.

When is earnest money refundable in Boston deals?

• Refundability depends on your contract and timely compliance; if you terminate within an active contingency period, the deposit is typically refundable.

Who holds the earnest money in Massachusetts?

• The listing broker, an attorney’s client trust account, or a title/closing company commonly serves as escrow holder as identified in your contract.

What if my lender denies the loan after I waive the financing contingency?

• If financing fails after you remove that protection, you may be in breach and risk forfeiting the deposit, subject to your contract’s remedies.

How do I prevent wire fraud when sending my deposit?

• Independently verify wiring instructions by calling a known number for the escrow holder and never rely only on email before sending funds.

Can I stage my deposit to reduce risk?

• Yes, staged deposits are sometimes accepted, especially in higher‑priced or new construction deals, but the seller must agree in the contract.