Writing an offer on a home in Evanston can move fast. One piece that often raises questions is earnest money, the good‑faith deposit that shows you are serious about buying. You want to protect that money while still writing a strong offer that stands out. In this guide, you will learn how much earnest money is typical, who holds it, when it is refundable, and how to avoid common pitfalls in Cook County. Let’s dive in.
Earnest money basics
Earnest money is a deposit you make after your offer is accepted. It tells the seller you are committed to the purchase and gives them limited financial protection if you default. If the sale closes, your deposit is credited toward your down payment or closing costs. If the deal falls apart, what happens next depends on the contract and the reason for cancellation.
How much to offer in Evanston
Typical earnest money is about 1 to 2 percent of the purchase price. In a competitive setting or for higher‑priced homes, you might see 3 to 5 percent or more. The right amount for you depends on current market competition, price point, and how many contingencies you include. A higher deposit can strengthen your offer, but it also raises your risk if you later default.
Factors that influence your deposit
- Market competition in Evanston at the time of your offer.
- Your purchase price and overall financial strength.
- The number and strength of contingencies you include.
- Seller expectations and whether there are multiple offers.
Who holds the funds
Earnest money is placed in an escrow or trust account. In many Evanston and wider Cook County transactions, the funds are moved to a title company’s escrow account shortly after acceptance. In some cases, a broker’s escrow account may hold the deposit. Your purchase contract and escrow agreement will specify who holds the funds and the conditions for release.
When and how you pay
Your contract will set the deadline for depositing earnest money. The typical window is 24 to 72 hours after acceptance. You can usually pay by personal check, certified cashier’s check, or wire transfer. Many title companies prefer certified funds or a verified wire for speed and clarity.
Safety first: avoid wire fraud
- Always verify wiring instructions by calling a known phone number for the title company or your agent.
- Do not rely on instructions sent only by email without phone verification.
- Confirm the account name, number, and amount before sending funds.
Contingencies that protect your deposit
Contingencies are your safety net. If you cancel under a valid contingency within the contract timeline, you generally recover your earnest money.
- Inspection contingency. Lets you inspect the home, request repairs or credits, and cancel if needed.
- Financing or mortgage contingency. Protects you if your lender ultimately denies the loan despite good‑faith efforts.
- Appraisal contingency. Covers you if the property appraises below the purchase price and the seller will not adjust terms.
- Title contingency. Requires clear title or a cure of defects. Allows you to cancel if defects are not resolved.
- Sale of buyer’s home contingency. Less common in competitive markets, but it can protect you if you need to sell first.
When your earnest money is at risk
Once you remove or waive contingencies, backing out for reasons outside the contract can put your deposit at risk. If you approve the inspection in writing, then walk away later without a protected reason, you may forfeit the deposit. Be cautious about removing financing or appraisal contingencies before your lender clears underwriting. Non‑refundable deposits can be negotiated, but they increase your risk and are not standard in typical Illinois residential deals. Consider consulting a real estate attorney before agreeing to any non‑refundable terms.
If the buyer or seller defaults
Your contract controls remedies, so read it closely and keep deadlines. If a buyer defaults after removing contingencies, the seller may keep the earnest money as liquidated damages, or they may pursue other remedies if allowed by the contract and law. If the seller breaches, buyers typically recover their deposit and may seek remedies such as specific performance or damages. Many disputes get resolved by negotiation or a mutual release, but unresolved cases can move to arbitration or court.
How escrow holders handle disputes
Title companies and brokers follow the written contract and escrow instructions. If the parties disagree about releasing the funds, the escrow holder usually keeps the deposit in place until both sides sign a mutual release or a court or arbitrator issues a decision. In some situations, the escrow holder may file an interpleader action to ask a court to decide.
Step‑by‑step: make a strong, safe deposit
- Get fully pre‑approved. Ask your lender for a clear, updated pre‑approval before offering a higher deposit.
- Ask about local norms. Have your agent confirm typical earnest money amounts for comparable Evanston homes under current conditions.
- Clarify escrow details in writing. Name the holder of funds, deposit method, and deposit deadline in your offer.
- Track your contingency dates. Put inspection, mortgage, appraisal, and title deadlines on your calendar so you stay protected.
- Keep documentation. Save inspection reports and any lender denial letters to support a refund if you cancel within the terms.
- Verify wires by phone. Call the title company directly to confirm wiring details before sending funds.
- Consider neutral handling. When possible, have a reputable title company or escrow agent hold the deposit rather than an individual.
- Ask an attorney about unusual terms. If you are considering a non‑refundable deposit or waived contingencies, get legal advice first.
Applying earnest money at closing
When your closing day arrives, the escrowed earnest money is credited toward your funds due. It can apply to your down payment, closing costs, or both. You will still bring any remaining funds required by your final closing statement. Your closing agent will show the credit on your settlement documents.
Local tips for Evanston buyers
Evanston is a high‑demand suburb near Chicago and Northwestern University. Inventory can be tight in some areas, and well‑priced homes may attract multiple offers. In that environment, a well‑sized earnest deposit and clear, strong terms can help your offer stand out. Balance your need to compete with your comfort level on risk, and use contingencies to protect your deposit.
The bottom line
Earnest money is a key part of your offer strategy in Evanston. Choose an amount that supports your offer, follow the contract deadlines closely, and use contingencies to protect your deposit. With the right plan and clear communication, you can stay competitive and keep your money safe from contract to close.
Ready to plan your offer strategy and protect your deposit from day one? Connect with Unknown Company for local guidance, clear timelines, and step‑by‑step support from first showing to closing.
FAQs
How does earnest money work in Evanston home purchases?
- It is a good‑faith deposit credited to you at closing, with refund or forfeiture determined by your contract and reasons for cancellation.
What is a typical earnest money amount for Evanston buyers?
- Many buyers offer about 1 to 2 percent of the price, and some go higher, around 3 to 5 percent, in competitive situations.
When is earnest money due after my offer is accepted?
- Most contracts require the deposit within 24 to 72 hours of acceptance, so have funds ready before you write.
Who usually holds earnest money in Cook County deals?
- A title company’s escrow account often holds the funds, though a broker’s escrow account may also be used as specified in your contract.
What contingencies let me recover my deposit if I cancel?
- Inspection, financing, appraisal, and title contingencies commonly protect your deposit when you cancel within the agreed timelines.
How can I reduce wire‑fraud risk when sending my deposit?
- Call the title company using a verified number to confirm wiring instructions, then double‑check the account details before sending funds.
What happens to my earnest money at closing in Evanston?
- The escrowed amount is applied as a credit toward your down payment or closing costs, and you bring any remaining funds shown on the settlement statement.
