Buying a home in Orlando and wondering how earnest money works? You are not alone. This good‑faith deposit can help your offer stand out, yet it also needs careful handling to protect your hard‑earned funds. In this guide, you will learn what earnest money is, what is typical in Orange County, which contingencies protect you, and practical steps to keep your deposit safe from contract mistakes and wire fraud. Let’s dive in.
What is earnest money?
Earnest money is a good‑faith deposit you provide after a seller accepts your offer. It shows you are serious about buying while you complete inspections, secure financing, and clear title.
The deposit is held in escrow by a broker, attorney, or title company. At closing, it is usually credited to your down payment or closing costs on your Closing Disclosure. If your contract allows you to cancel for a covered reason within the deadlines, your deposit is typically refundable.
How Orlando handles deposits
In Orlando and across Florida, the standard residential contracts spell out how much is due, who holds it, and how it can be released. Escrow is commonly held by a title or closing company, or by one of the real estate brokerages involved. Always confirm the holder before you send funds.
Delivery usually happens shortly after the contract is signed. Acceptable methods often include a cashier’s check, certified funds, or a wire. Get written instructions, and verify them by calling the escrow holder directly to reduce fraud risk.
Local details matter in Orange County. For example, some properties may be in flood zones or require flood insurance. Condo and HOA communities include document review periods that can affect timelines and your rights to a refund. Customs vary by neighborhood, price point, and market conditions, so confirm expectations with your agent and the closing agent.
How much should you put down?
Typical deposits in many markets, including Orlando, range from about 1 percent to 3 percent of the purchase price. For lower‑priced homes, a flat amount like 1,000 to 5,000 dollars is common. In competitive situations, sellers may expect 2 percent to 5 percent or more to make your offer stronger.
- Example for a 350,000 dollar home: 1 percent is 3,500 dollars; 2 percent is 7,000 dollars.
- Entry‑level homes under 250,000 dollars may see 1,000 to 3,000 dollar deposits, though multiple offers can push higher.
Factors that influence the amount
- Market competitiveness and inventory in your area.
- Your financing type, cash vs. financed, and any sale‑of‑home needs.
- Seller preferences and the property type, such as condo or new construction.
If you are a first‑time buyer with limited cash, talk with your agent about balancing a fair deposit with other strong terms. If you are relocating, pairing a solid deposit with tighter inspection or financing timelines can help, as long as your lender confirms it is realistic.
Contingencies that protect your deposit
Contingencies are your safety net. They set conditions that must be met for you to move forward, and they outline when you can cancel and receive your deposit back. The key is following the contract’s deadlines and notice steps.
- Financing contingency: If your loan is denied or you do not get approval by the deadline, this can allow cancellation with a refund when handled on time.
- Inspection contingency: You have a set period to inspect and negotiate. If you cancel properly within that window, your deposit is typically refundable.
- Appraisal contingency: If value comes in low, you can renegotiate or cancel depending on your contract language.
- Title contingency: Title issues, liens, or defects that cannot be resolved can justify a refund.
- HOA or condo document review: You can cancel within the allowed period if documents reveal unacceptable terms, fees, or issues.
- Insurance contingency: In the Orlando area, this often includes flood insurance. If coverage is unavailable or unaffordable, you may be able to cancel within the agreed period.
- Sale‑of‑home contingency: Less competitive, but it protects you if your current home must sell first and timelines are met.
Important: When you remove a contingency in writing, you typically give up that protection. Confirm the risks and timing with your agent, and consult an attorney if you anticipate a complex issue.
Timing, delivery, and wire safety
Your contract will specify the deposit deadline, often soon after execution. Acceptable payment methods are usually listed, and they can include cashier’s check or wire transfer. Ask for clear, written instructions and a receipt once funds are received.
Wire fraud is a real risk. Before you send money, call a known phone number for the title or escrow company to confirm account details. Do not rely only on email. Verify the payee name, and keep proof of your transfer.
Buyer checklist
Use this quick checklist to stay organized from offer to closing.
Confirm with your agent
- Exact deposit amount and what is typical for your price range and property type.
- Who holds your funds and how that affects dispute resolution.
- All deadlines: deposit, inspection, appraisal, financing, title, HOA review, and closing.
- Acceptable payment methods and the correct payee name.
- Written delivery instructions and how you will receive a receipt.
- Whether your deposit counts toward lender liquid asset requirements.
- How to structure a competitive offer if your deposit is on the lower side.
Confirm with your lender
- Documentation needed to show source of funds for underwriting.
- How the deposit applies to your down payment and cash to close.
- Timing for bank statements and whether funds must be seasoned.
- Rules for gifts and any letters required.
Confirm with title or escrow
- Whether they hold the deposit and their escrow process.
- Exact wiring instructions and how they authenticate requests.
- Their receipt policy and how the deposit will appear on your closing documents.
- What happens if the closing is delayed or the contract is canceled.
Safety and fraud protection
- Verify wiring instructions by phone using a trusted number.
- Confirm the beneficiary account name matches the escrow holder.
- Keep records of all instructions and receipts.
If there is a dispute
- Know your contract’s process for mediation, arbitration, or court.
- Preserve documentation, including the contract, receipts, emails, inspection reports, and any loan denial letters.
- Consider contacting a real estate attorney early if funds are contested.
How Mora Perez guides Orlando buyers
You deserve a smooth, well‑protected path to closing. With deep experience in Lake Nona and greater Orlando, Mora Perez helps you size the deposit for your goals, select the right contingencies, and track every deadline. Our team coordinates with your lender and title company, reviews HOA and condo timelines, and provides clear steps to avoid wire fraud.
We serve first‑time buyers, move‑up families, and luxury clients across Lake Nona, Winter Garden, Windermere, St. Cloud, Kissimmee, Clermont, and Davenport. If you prefer Spanish, we provide fully bilingual guidance. From offer to closing, you stay informed and confident.
Ready to make a strong offer and keep your deposit protected? Reach out to Mora Perez for a friendly, expert game plan tailored to your Orlando search.
FAQs
What is earnest money in an Orlando home purchase?
- It is a good‑faith deposit held in escrow after your offer is accepted, applied to your down payment or closing costs at closing unless the contract says otherwise.
How much earnest money do Orlando buyers usually put down?
- Many buyers put 1 to 3 percent of the price, with 1,000 to 5,000 dollars common for lower‑priced homes and higher amounts in competitive situations.
Which contingencies protect my deposit in Florida?
- Financing, inspection, appraisal, clear title, HOA or condo document review, insurance, and sometimes sale‑of‑home contingencies protect you when used within deadlines.
Who holds the deposit and how do I pay it safely?
- A title or closing company, or a real estate broker, typically holds funds; confirm in writing and verify wiring instructions by phone before sending money.
What happens to my deposit if I cancel the contract?
- If you cancel for a covered reason within the contract timeline, you usually receive a refund; if you default without that right, the seller may have grounds to keep it.
Does earnest money reduce my cash to close?
- Yes. It is typically credited toward your down payment or closing costs and must be documented for your lender.
