If you’re buying a home in Denver, you’ve probably heard the term earnest money. But what exactly is it, how much should you expect to pay, and what happens if your deal falls through? Let’s break down how earnest money works in Colorado’s real estate market and why it matters to both buyers and sellers.
What Is Earnest Money?
Earnest money is a good-faith deposit you provide when your offer on a home is accepted. Think of it as a way to show the seller you’re serious about purchasing. In Denver’s competitive real estate market, a strong earnest money deposit can make your offer more attractive.
How Much Earnest Money Do You Need in Denver?
The amount varies, but most contracts require between 1% and 3% of the purchase price.
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On a $400,000 condo in Capitol Hill, you might put down $4,000–$12,000.
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On a $1,000,000 home in Cherry Creek, it could range from $10,000–$30,000.
The exact number can depend on current market conditions. In a multiple-offer situation, buyers sometimes offer higher earnest money to stand out.
When Is Earnest Money Refundable in Colorado?
Colorado’s real estate contracts are buyer-friendly and include multiple contingencies that protect your deposit. Earnest money is typically refundable if you terminate within these deadlines:
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Inspection Contingency: If the inspection reveals problems you’re not comfortable with.
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Appraisal Contingency: If the home appraises for less than the purchase price.
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Financing Contingency: If your loan falls through despite best efforts.
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Title & HOA Review: If you uncover issues with ownership, liens, or HOA rules.
If you cancel outside of these protections, or simply change your mind after deadlines, the seller may keep your earnest money as compensation for taking their home off the market.
Tips for Protecting Your Earnest Money in Denver
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Work with an experienced Denver real estate agent who tracks all deadlines
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Understand each contingency in your contract before signing
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Communicate with your lender to ensure financing is on track
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Always request documents (like HOA bylaws) early to stay ahead of deadlines
Final Thoughts
Earnest money is an important part of buying a home in Denver, but it doesn’t have to be stressful. With the right guidance, you can protect your deposit and move forward with confidence. Whether you’re purchasing a downtown condo or a family home in Highlands Ranch, knowing how earnest money works will help you navigate the process like a pro.
