Are you unsure how earnest money works when you buy a home in Denver? You are not alone. This small deposit plays a big role in getting your offer accepted and protecting your interests as you move toward closing. In this guide, you will learn how much to expect, what timelines and contingencies matter under Colorado contracts, and how to prepare and protect your funds. Let’s dive in.

Earnest money basics in Colorado

Earnest money is a good‑faith deposit you agree to pay after your offer is accepted. In Colorado, it is a contract term, not a tax or fee. If your transaction closes, the deposit is credited toward your cash to close as part of the purchase price. If the deal does not close, what happens to your deposit depends on the contract and whether you met the deadlines it sets.

Earnest money serves three purposes:

• Shows the seller you are serious about the purchase.
• Gives the seller a potential remedy if you default under the contract.
• Reduces your cash due at closing because it is applied to your costs.

Most Denver offers use the Colorado Real Estate Commission’s contract forms or REALTOR forms that spell out deadlines, escrow instructions, and remedies. Your rights come from the written contract, so pay close attention to those terms.

Typical amounts in Denver

In the Denver metro area, earnest money is commonly 1 to 2 percent of the purchase price. Many transactions also use a flat range of roughly $5,000 to $20,000, depending on price point and market conditions. In competitive or multiple‑offer situations, buyers often raise deposits to 2 to 5 percent to strengthen their offer. For lower‑priced homes or some condos, smaller deposits such as $1,000 to $3,000 are still common.

Your ideal amount is negotiable and depends on:

• Price of the home and overall market conditions.
• How competitive the listing is and whether there are multiple offers.
• Your financing strength and ability to offer other favorable terms.
• Seller preferences and advice from your agent.

A larger deposit can help you win, but it also increases your exposure if you miss a deadline or default. Balance competitiveness with comfort.

Key deadlines and contingencies

Colorado contracts include specific deadlines that control when you can recover your deposit and when you risk forfeiture. Timeframes below are common in practice, but your contract rules.

Delivery deadline

Your contract will set the deadline to deliver earnest money to the named escrow or title company. Many Denver contracts require delivery within 1 to 3 business days after acceptance. The method and recipient are specified in the agreement.

Inspection period

You will typically have an inspection and objection deadline, often 7 to 15 days from acceptance. If you terminate properly by the deadline under this contingency, your deposit is usually refundable. If you do not act by the deadline, you may lose this right.

Appraisal and title

Appraisal and title deadlines are set in the contract. If the property does not appraise or a title issue cannot be resolved, you can usually terminate on time and recover your deposit. Follow the notice procedure exactly as written.

Financing

The financing or loan objection date is commonly 21 to 30 days from acceptance. If you are unable to obtain financing and you properly terminate by the deadline, the deposit is typically refundable. Make sure your lender timeline supports your contract dates.

Closing

If the transaction closes, your earnest money is credited toward your cash to close. You will see it reflected on your final settlement statement.

How refundability works

• During active contingency periods, your deposit is generally refundable if you give written notice by the deadline and follow the contract’s instructions.
• If you terminate for reasons not allowed by the contract or you miss a deadline, the seller may claim the deposit as damages under the remedies section.
• The method and timing of your notice matter. Keep a clear record of your notices and confirmations.

Who holds the money and how it is released

Title or escrow companies commonly hold earnest money in Colorado. Your contract will name the escrow holder and tell you how to deliver funds. Wire transfers and cashier’s checks are typical, and companies maintain “good funds” policies that specify what they can accept and when.

If the deal closes, the escrow holder credits the deposit to your closing funds. If the deal falls apart, the simplest path is a mutual written release signed by both parties that directs the escrow holder to disburse funds. If there is a dispute, the escrow holder may keep funds in trust until both parties agree, or pursue a court process, depending on contract terms and company policy.

Always obtain wiring instructions directly from the title company using a verified phone number or their official website. Do not rely on email‑only instructions.

Your step‑by‑step plan to prepare and protect funds

Before you write the offer

• Talk with your lender and agent about how much you can comfortably deposit and how it fits your down payment and reserves.
• Set a strategy for the amount you offer and how it supports your broader terms.

Funding logistics

• Keep the funds in a traceable account and be ready to provide proof of funds.
• Confirm the escrow holder’s accepted payment methods and “good funds” policy before delivery.
• Retain all receipts and confirmations for wires or cashier’s checks.

Preventing wire fraud

• Call the title company at a number you find on their official website to confirm wiring instructions before sending money.
• Never act on changed wiring instructions received only by email without phone verification.
• Consider using a cashier’s check if permitted and practical for you.

If something goes wrong

• If you plan to terminate under a contingency, send written notice before the deadline and keep copies.
• If the seller refuses to release funds after a valid termination, work with your agent and consider legal counsel. Some disputes require a written settlement or formal dispute resolution.

Questions to ask before you submit an offer

• Who will hold the deposit, and what is the contact information?
• What is the exact delivery deadline and method required?
• What are the inspection, appraisal, title, and financing deadlines?
• How will the deposit be credited on your settlement statement?
• What is the title company’s process for confirming receipt of funds?

Strategy tips for competitive offers

• Increase the deposit modestly rather than dramatically if you want to signal strength while limiting risk.
• Pair a solid deposit with clear proof of funds, a responsive lender, and realistic closing timelines.
• Keep your inspection and appraisal timelines tight but achievable so you do not lose protection by missing dates.
• Coordinate closely with your agent to ensure every deadline is tracked and met.

Final thoughts

Earnest money is a small part of your purchase price, but it carries big weight in Denver negotiations. When you know the typical amounts, the key deadlines, and the refund rules, you can write a strong offer and protect your interests. With the right plan and clear communication with your lender, title company, and agent, you can move from accepted offer to closing with confidence.

Ready to talk through your strategy for a specific home and price point? Connect with Ben Rule for tailored guidance on amounts, timelines, and protections that fit your goals.

FAQs

What is earnest money in Colorado real estate?

• It is a good‑faith deposit you pay after your offer is accepted that is applied to your closing funds if the deal closes and may be refundable if you terminate under contract contingencies on time.

How much earnest money is typical in Denver?

• Many buyers put down 1 to 2 percent of the price or about $5,000 to $20,000, with 2 to 5 percent common in competitive situations and $1,000 to $3,000 for some lower‑priced or condo purchases.

When is earnest money due after acceptance?

• Your contract sets the deadline, often within 1 to 3 business days, and it also names the escrow or title company that will hold the funds.

Can I get my deposit back if I cancel after inspection?

• If you terminate properly by the inspection deadline and follow the contract’s notice requirements, the deposit is typically refundable.

Who holds my earnest money and how do I pay it?

• A title or escrow company usually holds it, and you will deliver funds by wire or cashier’s check according to the company’s “good funds” policy.

What if the seller refuses to release my deposit?

• Work with your agent and the escrow holder to document your valid termination; if there is still a dispute, a written settlement or formal dispute resolution may be required under the contract.