Writing an offer in Cordova and wondering how much earnest money to put down and when it is due? You are not alone. This one line in your purchase contract carries real weight for your budget and your bargaining power. In this guide, you will learn what earnest money is, typical amounts for Memphis and Shelby County, when you must deliver it, and how refunds and disputes work so you can move forward with confidence. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you include with your offer to show the seller you intend to complete the purchase. It is not an extra fee. At closing, it is usually credited to your down payment or closing costs.
Your contract will name who holds the funds during escrow. In the Memphis area, the holder is commonly a title or escrow company, a closing attorney, or a brokerage escrow account. State rules and local custom guide how these trust funds are handled, and your contract controls the details.
If you later default outside of your contract protections, the seller may seek to keep your deposit as damages. If the deal closes, you get full credit for the amount you put down.
How much to offer in Cordova
There is no fixed amount required for every purchase. In many mid-priced markets like Memphis and its suburbs, buyers often choose a flat amount or a percentage tied to the price.
- A common range is around 1% of the purchase price, but it can be higher or lower based on the situation.
- Many buyers offer a few thousand dollars as a flat deposit. In calm markets, that might be closer to 1,000 to 3,000 dollars. In more competitive periods, deposits often rise.
The right number for you depends on price point, local competition, and your financing strength.
Examples by price point
These simple illustrations show how buyers often think about earnest money in Shelby County:
- 200,000 dollar purchase: 1% is 2,000 dollars. Many buyers might offer 1,000 to 3,000 dollars depending on competition.
- 350,000 dollar purchase: 1% is 3,500 dollars. Buyers might offer 3,000 to 7,500 dollars in a more active market.
In multiple-offer situations, some buyers increase deposits to 2% to 5% to strengthen their offer. A larger deposit can be compelling, but it also raises your risk if you later default after removing contingencies.
What influences your amount
- Market conditions: In a buyer’s market, smaller deposits are common. In a seller’s market with multiple offers, bigger deposits help your offer stand out.
- Price: Higher-priced homes often see larger deposits even if the percentage is similar.
- Financing: Strong preapproval or cash may support a lower deposit. If you are waiving contingencies, sellers often expect higher earnest money.
- Local custom: Listing agents and recent comps guide expectations. Ask your agent for current norms in Cordova and the broader Memphis area.
When earnest money is due
Your purchase agreement sets the deadline. A common practice is delivery within 24 to 72 hours of seller acceptance, but your signed contract controls the exact timing. Missing that window can put you in default, so plan ahead.
Deliver the funds to the holder named in your contract. This is often the title or escrow company that will close your transaction, or the listing brokerage’s trust account when that is the agreed practice.
Who holds your deposit
Your contract should clearly state the escrow holder. In Shelby County, deposits are commonly held by a title or escrow company, a closing attorney, or a brokerage escrow account. The escrow holder must follow trust-account rules and the instructions in your contract when receiving and releasing funds.
Payment methods and proof
Acceptable methods often include a certified or cashier’s check, a personal check if allowed, or a wire transfer to the escrow or title company. Some escrow holders have strict wiring procedures and verification steps.
Always get written proof of delivery, such as a receipt from the holder or a bank confirmation. Keep that record with your contract documents.
Important safety note: Confirm wiring instructions directly with the title or escrow company by phone using a known, published number. Do not rely on email alone. Wire fraud is real, and verification protects you.
When earnest money is refundable
Refunds depend on your contract terms and timing. In many Memphis-area transactions, earnest money is refunded when you properly cancel under an active contingency within its deadline. Common examples include:
- Inspection contingency: If you terminate within the inspection window as allowed by your contract.
- Financing contingency: If your loan is denied and you followed the contingency steps and timelines.
- Appraisal contingency: If the appraisal is low and you choose to terminate within the contingency period.
- Title and seller obligations: If the seller fails to perform a required contract obligation.
To protect your refund rights, send notices in writing, follow every deadline, and keep documentation.
When you could forfeit it
If you remove contingencies or miss their deadlines and then default for reasons not covered by your contract, the seller may be entitled to keep your deposit as liquidated damages or pursue other remedies permitted by the agreement.
This is why it is important to understand every contingency, know each date, and coordinate closely with your agent and lender. A larger deposit increases your exposure if you later default.
Low appraisal and financing outcomes
A low appraisal does not automatically mean you lose your earnest money. Your options depend on the appraisal or financing clauses in your contract. You might renegotiate the price, add cash to cover the gap, or terminate within your contingency window for a refund.
If a lender denies your loan, your outcome depends on whether you complied with your financing contingency. If you met the requirements and deadlines, refunds are typical. If you missed steps or deadlines, the seller may claim default. Your contract governs the result.
How escrow disputes are handled
Most purchase agreements include instructions for what the escrow holder should do if both sides claim the deposit. The holder may keep funds in escrow until there is a mutual release, mediation or arbitration outcome, or a court order. Some holders may file an interpleader so a court can decide.
If a dispute arises, follow your contract’s dispute resolution steps and consult your agent. Keep copies of all communications, notices, and receipts until the dispute is resolved.
Quick buyer checklist
Use this list as a fast reference for Cordova and Shelby County purchases:
- Earnest money shows good faith and is applied to your down payment or closing costs at closing.
- Typical deposits are market-driven. Many buyers offer a few thousand dollars or around 1% of the price, adjusting for competition.
- Your contract sets the deadline. Delivery is often due within 24 to 72 hours of acceptance.
- Funds are held by the title or escrow company, closing attorney, or brokerage named in your contract.
- Refunds depend on contingencies, notices, and deadlines. Defaults can lead to forfeiture.
- Keep proof of your deposit and all notices. Verify wiring instructions by phone to prevent fraud.
Pro tips for Memphis-area buyers
- Ask about current norms: Your agent can share what has worked in recent accepted offers at your price point.
- Balance risk and strength: A higher deposit can win attention in a multiple-offer situation. Keep contingencies intact until you are confident in inspections and financing.
- Plan logistics early: Know who holds your deposit, the payment method they accept, and how you will verify wire instructions.
- Track every date: Calendar your earnest money due date and all contingency deadlines. Send notices in writing and keep copies.
- Lean on local pros: Local agents and title companies know how funds are handled and what sellers expect in Cordova and Memphis.
Your next step
Choosing the right earnest money strategy helps you compete without taking on unnecessary risk. If you want clear, local guidance on what number makes sense and how to protect your deposit from contract to closing, we are here to help.
Reach out to Kevin & Alli Clark - The Clark Team for step-by-step support on your offer, your contingencies, and your path to closing in Cordova and throughout Shelby County.
FAQs
What is earnest money in Tennessee real estate?
- It is a buyer’s good-faith deposit that accompanies your offer, held in escrow and typically credited to your down payment or closing costs at closing.
How much earnest money is typical in Cordova?
- Many buyers offer a few thousand dollars or around 1% of the price, adjusting up in competitive markets and down when conditions are calmer.
When is earnest money due after acceptance?
- Your contract sets the timeline. A common practice is delivery within 24 to 72 hours of seller acceptance, but follow your signed agreement.
Who holds earnest money in Shelby County?
- The contract names the holder, often a title or escrow company, a closing attorney, or a brokerage escrow account.
Is earnest money refundable if I cancel after inspection?
- If you terminate within the inspection contingency period following your contract rules, refunds are typically granted.
What happens if my appraisal comes in low?
- Your options depend on your appraisal or financing clauses. You may renegotiate, add cash, or cancel within the contingency window for a refund.
How do I protect against wire fraud when paying my deposit?
- Verify wiring instructions by calling the title or escrow company at a published phone number and never rely on email instructions alone.
Does my earnest money count toward my closing costs?
- Yes. If you close, your deposit is usually credited toward your down payment or closing costs as shown on your closing documents.
