Ever wonder how much earnest money you should put down on a San Juan Capistrano home and what it actually does for you? You are not alone. Choosing the right deposit can strengthen your offer, protect your funds, and set the tone for a smooth escrow. In this guide, you will learn what earnest money is, how much buyers typically use in Orange County, how contingencies protect your deposit, and how to move money safely through escrow. Let’s dive in.
What earnest money is
Earnest money is the deposit you send with your offer to show the seller you are serious. In California, the deposit goes to the escrow or title company named in your purchase contract. If the sale closes, your deposit is credited toward your down payment or closing costs.
The purchase agreement and escrow instructions spell out the amount, who holds it, how it is applied, and the conditions for refund or forfeiture. Sellers care because a meaningful deposit lowers the risk that a buyer will walk away and signals strong commitment in competitive situations.
How much in San Juan Capistrano
San Juan Capistrano sits in Orange County’s coastal and suburban corridor where prices are higher than many other regions. That means deposits are larger in dollar terms, even when the percentage looks modest.
Typical ranges
- Non-competitive offers: around 1% of the purchase price is a common starting point.
- Competitive or multiple-offer situations: 2–3% is common. Some buyers go higher to stand out.
- Cash or very strong offers: larger deposits can signal strength, even though your legal protections do not change just because the amount is higher.
Real-dollar examples
- On a $1,000,000 home, 1% is $10,000.
- On a $1,000,000 home, 2% is $20,000.
- On a $1,000,000 home, 3% is $30,000.
These examples help you translate a strategy into dollars, so you can choose what fits your comfort and the market.
What lenders expect
Your lender will count earnest money as part of your funds to close. Be ready to document it with a copy of the deposit, a bank statement showing the transfer, or a canceled check. Avoid last-minute, unexplained transfers since underwriters look for clear paper trails.
How contingencies protect your deposit
Contingencies are your safety valves. If you cancel within the timelines and procedures in the contract, you typically preserve your deposit.
Common contingencies
- Financing contingency: If you cannot get the loan described in your offer within the timeframe, you can usually cancel and keep your deposit when you follow the contract steps.
- Inspection contingency: If inspections uncover issues you are not willing to accept, you can cancel on time and protect your deposit.
- Appraisal contingency: If the home appraises below the price and you choose to cancel under the appraisal terms, your deposit is usually refundable.
- Title contingency: Unresolved title issues can allow you to cancel and preserve your funds.
- Sale-of-home contingency: If your offer depends on selling your current home first and that does not happen on time, you can cancel per the contract terms.
Deadlines and notices
Contingencies only work if you follow the dates and notice rules in your purchase agreement. If you miss a deadline to remove or act on a contingency, you may lose refund rights. Always send notices in writing and within the stated timelines.
Liquidated damages and remedies in California
Standard California agreements often include a clause that can limit the seller’s remedy to keeping the deposit as liquidated damages if the buyer defaults. The exact outcome depends on the contract language you and the seller sign. In some cases, other remedies may apply. If you have questions about exposure, consult your real estate agent and, if needed, an attorney.
Where the deposit goes
Your deposit is placed with the escrow or title company named in your offer. Escrow releases it as directed by the contract or by mutual written instructions from both parties. If there is a dispute, escrow may hold the funds until you and the seller resolve it or a court orders the release.
Wire safety and escrow best practices
Real estate wire fraud is a real risk, especially near closing when large transfers happen. Protect yourself with a simple, repeatable process.
Wire-safety checklist
- Verify by phone using trusted numbers. If you receive wiring instructions by email, call the escrow or title company at a number you already have on file or from their official website. Do not use phone numbers listed only in the email you received.
- Ask for two-step verification. Request a call-back confirmation or a second factor when possible.
- Use secure channels. Confirm details through a secure portal, authenticated email, or in person if feasible.
- Slow down if anything looks off. Different bank names, typos, or last-minute changes are red flags. Do not send funds until you confirm.
- Avoid public Wi-Fi and enable multi-factor authentication on the email accounts you use for the transaction.
- Document your transfer. Save wire receipts, confirmation numbers, and the steps you took to verify.
If you suspect fraud
Contact your escrow officer and bank immediately to attempt a recall. Report the incident to law enforcement and federal consumer agencies, and notify your agent, title company, and lender right away.
Pick the right deposit strategy
Choose a deposit that fits your risk tolerance and the level of competition. Your strategy can flex with the property and the market.
Three buyer profiles
- Conservative: Around 1% or a modest fixed amount and keep full contingencies. This is a fit if you want maximum protection while you learn more about the home and your loan.
- Balanced: 1–2% with inspection and financing contingencies. Consider increasing the deposit or shortening contingency periods if you need to compete.
- Aggressive: 2–3% or higher with stronger proof-of-funds and a shorter timeline. This can help in multiple offers if you are comfortable with the risk.
Documents to prepare
- Proof of funds for the deposit.
- A current pre-approval letter from your lender.
- Escrow/title company contact information.
Real-world outcomes
- Example A: You submit 1% with inspection and financing contingencies. Inspections pass, your loan is approved, and you close. Your deposit is credited at closing.
- Example B: You submit 2%, remove your inspection contingency early, then discover a major issue after the deadline and cancel. You may face a forfeiture risk if you removed protections and cancel late.
- Example C: Your offer includes a financing contingency. Your lender later denies the loan. You cancel on time and provide required documents. Your deposit is typically refundable.
Local tips for San Juan Capistrano buyers
- Expect bigger dollar deposits: Higher local prices mean even a 1% deposit can be a large number.
- Match the market: When inventory is tight and multiple offers are common, stronger deposits can help your offer stand out.
- Keep your paper trail clean: Plan your deposit source early and avoid last-minute transfers without documentation.
Ready to write a strong offer?
If you want a deposit strategy that balances protection and competitiveness, you are in the right place. A local, hands-on team can help you size your earnest money, set clear contingency timelines, and coordinate a secure escrow process. For tailored guidance on your next offer in South Orange County, connect with the Danielle Hesley Real Estate Group.
FAQs
What is earnest money in a California home purchase?
- It is a good-faith deposit you include with your offer, held by escrow, and credited to you at closing if the sale completes.
How much earnest money is typical in San Juan Capistrano?
- Around 1% in non-competitive offers and 2–3% in competitive situations, with larger amounts sometimes used to stand out.
Is my earnest money refundable if the appraisal is low?
- If your offer includes an appraisal contingency and you cancel within the contract timeline, your deposit is typically refundable.
Can I negotiate the deposit amount with the seller?
- Yes. Earnest money is negotiable and a key part of offer strategy.
What happens to my deposit if financing falls through?
- If you have a financing contingency and cancel within the timeframe, your deposit is generally refundable when you follow the contract steps.
How do I verify wire instructions to escrow in Orange County?
- Call the escrow or title company using a trusted phone number you already have, confirm details verbally, and use secure channels before sending funds.
