Earnest Money In Temple City: How It Works

Buying in Temple City and wondering how earnest money works? You are not alone. This small but important deposit can help your offer stand out, and it also protects the seller while you complete inspections and financing. In this guide, you will learn how deposits are handled in California, what is typical in Temple City, when money is refundable, and how to use your deposit to write a clean, competitive offer. Let’s dive in.

What earnest money is

Earnest money is your good‑faith deposit. You put funds into escrow to show you are serious about buying the home. It is separate from your down payment, though it is credited toward your purchase at closing.

In California, your deposit is governed by the purchase contract, commonly the California Association of Realtors Residential Purchase Agreement. The contract sets the amount, the deadline to deliver funds, the contingencies that protect you, and what happens if either party defaults.

How escrow holds your funds

After your offer is accepted, you usually deposit the funds with the escrow or title company named in your contract. The escrow holder is a neutral third party. Neither you nor the seller can withdraw the money on your own. Escrow releases funds only according to the written instructions in the contract, such as at closing or if both parties agree to a cancellation.

If there is a dispute over who should receive the deposit, escrow may hold the funds until both parties agree, a court orders distribution, or the contract’s dispute steps are completed. Escrow and title companies in California are regulated and must follow strict rules and your escrow instructions.

Temple City deposit norms

In Los Angeles County, including Temple City, typical earnest money falls into two common patterns:

• About 1% to 3% of the purchase price, or
• A flat amount, often 5,000 to 25,000 dollars, with higher deposits on higher‑priced homes.

These are market norms, not legal requirements. The right amount depends on the property price, current competition, and your comfort with risk. In multiple‑offer situations, buyers sometimes increase the deposit to signal stronger commitment.

Deposit timing and delivery

Your contract will set the exact timing to deliver funds to escrow. Common practice is to deposit with the offer or within a short window after acceptance, often 24 to 72 hours. Plan ahead so you can meet the deadline.

Acceptable forms typically include a cashier’s check, certified check, or a bank wire. Some escrow companies accept personal checks, but many prefer a cashier’s check or wire for faster clearance. Ask escrow what they accept and how they confirm receipt.

When deposits are refundable

Refundability depends on your contingencies and the timing of your cancellation. Common buyer protections include:

• Inspection contingency. If you discover issues and properly cancel within your inspection period, your deposit is usually refundable.
• Loan contingency. If you cannot obtain the specified financing within the loan contingency period and cancel correctly, you typically receive a refund.
• Appraisal contingency. If the home does not appraise at the contract price and the parties cannot agree on a fix, you may cancel under this contingency and receive a refund.
• Title, HOA, and document review. If material title defects or HOA issues are unacceptable and you cancel within the allowed period, the deposit is usually returned.
• Other negotiated contingencies. If your contract includes additional protections and you cancel per those terms, refund typically follows.

Always follow the contract’s cancellation steps in writing and within the stated periods to preserve your rights.

When your money is at risk

Your deposit can be at risk if you default after contingencies are removed or expire. Examples include a change of heart after you have removed protections, or an inability to fund closing when no loan contingency remains. The seller may be entitled to seek your deposit as damages, depending on the contract and the remedies they elect.

If you attempt to cancel improperly or outside the agreed procedures, you may also jeopardize your refund. In a dispute, escrow will usually hold the funds until the parties agree or a legal decision is made. The seller’s claim to the deposit is not automatic. It depends on the contract and the facts.

Key timing concepts to watch

• Written contingency removal. You remove contingencies in writing. If you miss the deadline or remove a contingency, you reduce your deposit protections.
• Time is of the essence. Many contracts include strict timing language. Small delays can have big consequences.
• Escrow receipts and notices. Keep copies of deposit receipts, contingency removals, and any cancellation notices. Good paperwork helps avoid confusion later.

Tips to write a clean, competitive offer

You want to be strong without taking on unnecessary risk. Use these local, practical steps for Temple City:

• Choose an amount that signals commitment. Start with 1% to 3% of the price. In hotter segments, consider the higher end or a stronger flat sum. Balance competitiveness with your risk tolerance.
• Deliver funds fast. Meet your contract deadline for deposit delivery. Ask escrow which payment method clears quickest and request a written receipt.
• Tighten but keep key contingencies. Shorten periods to be competitive, but be realistic. Many buyers aim for a 7 to 10 day inspection window. Shorten loan and appraisal periods only if your lender and agent agree it is prudent.
• Be cautious with appraisal risk. If you plan to bid above asking, think carefully before removing the appraisal contingency unless you are prepared to bring extra cash.
• “As‑is” still means inspect. An as‑is offer can be strong. You still retain inspection rights unless waived. Use them to understand condition and costs, then decide how to proceed.
• Show you are ready. Include proof of funds and a strong preapproval with your offer. Make the deposit terms clear in writing, including amount, timing, and escrow holder.

Wire‑fraud safety basics

Wire fraud is a known risk in real estate. Protect your deposit with a few simple steps:

• Verify instructions by phone. Call the escrow company using a phone number you find independently, not one only in an email.
• Confirm every detail. Verify the account name, number, and routing before sending funds.
• Ask for confirmation. Request a same‑day email or written receipt when funds arrive.

What to do next

Your deposit strategy should match your goals, your financing, and the pace of the Temple City market segment you are targeting. A right‑sized deposit, fast delivery, and smart contingency timing will help your offer look serious while keeping your risk in check. If you are unsure how much to put down or which periods to shorten, talk with a local expert who works these contracts every day.

If you are preparing to buy in Temple City or nearby San Gabriel Valley neighborhoods, we are here to help you plan a clean, competitive offer from the start. Connect with Art Del Rey Realty Inc. for local guidance tailored to your price point and timeline.

FAQs

How much earnest money should I put down in Temple City?

• Typical ranges are 1% to 3% of the purchase price or a flat 5,000 to 25,000 dollars, adjusted for price tier and current competition.

When do I have to deposit my earnest money?

• Most contracts require deposit with the offer or within a short window after acceptance, commonly 24 to 72 hours. Follow your contract’s exact deadline.

Can I get my deposit back if inspections uncover problems?

• If you cancel properly within your inspection contingency period, the deposit is usually refundable. Once you remove that contingency, refundability is unlikely.

What if my loan falls through after I am in escrow?

• If you have a valid loan contingency and cancel within that period following the contract steps, your deposit is typically refundable. If you waived the loan contingency, your funds may be at risk.

Can the seller keep my deposit if I back out late?

• Possibly. If you default after removing contingencies or breach the agreement, the seller may seek to retain your deposit under the contract’s remedies.

How do I avoid wire‑transfer fraud when sending my deposit?

• Verify wiring instructions directly with escrow using a phone number you obtain independently, confirm details verbally, and request written confirmation when funds arrive.