Earnest money is a deposit you make when your offer is accepted, usually held by the escrow company and credited toward your purchase at closing. There's no set amount in Arizona; it's negotiated. Under the standard Arizona purchase contract, you can generally get it back if you cancel properly within a contingency, like the inspection period or the loan contingency. It's at risk if you breach the contract and don't fix it within the three day cure period after notice.
When you write an offer on an Arizona home, one of the first numbers on the contract after the price is the earnest money. It's your deposit, and it tells the seller you're serious. It's also real money, so it makes sense to understand exactly when it's protected and when it isn't before you put it down.
What earnest money is
Earnest money is a good faith deposit you make when your offer is accepted. In Arizona it's usually held by the escrow company handling your closing. It isn't an extra cost. At closing, it's credited toward your down payment and closing costs, so it's simply part of the money you were going to bring anyway.
Under the standard Arizona REALTORS purchase contract, the earnest money is deposited upon acceptance, and the contract says how you're paying it, whether by check or by wire.
How much to put down
There's no amount set by Arizona law. It's negotiated like everything else in the offer. A larger deposit can make your offer stronger in a competitive situation, because it shows the seller you're committed. A smaller one keeps less of your cash tied up. The right number depends on the price, how much competition there is and how comfortable you are with the contract terms. This is one of the things we talk through together before you write an offer, along with the strategy in How to win a multiple offer situation.
When your earnest money is protected
The standard Arizona contract has several built in protections. If you follow the steps and meet the deadlines, you can generally cancel and get your earnest money back in situations like these.
| Situation | What protects you |
|---|---|
| You don't like what the inspections find | You cancel in writing within the inspection period, which is ten days after acceptance unless the contract says otherwise |
| You don't approve the seller's disclosure | You have a short window after you receive the Seller's Property Disclosure Statement |
| You can't get your loan approved | You deliver notice of inability to get the loan no later than three days before the closing date |
| The home doesn't appraise for the price | The appraisal contingency, if it's in your contract |
| You don't approve the HOA documents | You have a review window after you receive them |
The key words are in writing and on time. The protection comes from delivering the right notice before the deadline. Miss the deadline and the protection may be gone. More on the inspection period in What to expect from an Arizona home inspection.
When your earnest money is at risk
You can lose your earnest money if you breach the contract. The Arizona contract has no automatic breaches. If one side doesn't do something it promised, the other side delivers a Cure Period Notice, and the side that's behind gets three days to fix it. If it isn't fixed within those three days, it becomes a breach. When a buyer is the one in breach, the contract generally lets the seller keep the earnest money.
Arizona REALTORS has published examples of how this plays out. In one, a buyer who didn't act during the three day cure period wasn't entitled to get the earnest money back when trying to cancel afterward. The lesson is simple. If you ever receive a Cure Period Notice, call me that day.
Common ways buyers put their deposit at risk:
1 - Missing the deadline to cancel during the inspection period
2 - Changing jobs or taking on new debt that sinks the loan, without giving notice in time
3 - Not depositing the earnest money when the contract says to
4 - Not signing loan documents or bringing closing funds on time
What happens in a dispute
If the buyer and seller disagree about who gets the earnest money, the escrow company generally won't release it on its own. It usually needs both parties to sign cancellation instructions, or a decision through the dispute process in the contract. That's why clean notices and good records matter so much. Most of these situations are avoided entirely when deadlines are tracked from day one.
A word about wire fraud
If you wire your earnest money, protect it. Criminals send fake emails that look like they come from an escrow company or an agent, with new wiring instructions. Before you send a wire, call the escrow company at a number you got on your own, not one from the email, and confirm the instructions out loud. Escrow companies don't change wiring instructions by email.
New construction is different
Everything above is about the standard Arizona resale contract. When you buy from a builder, you sign the builder's own contract, not the Arizona REALTORS form. Builder deposits are often larger, may be released to the builder early, and are frequently nonrefundable once certain dates pass. Read that contract closely before you sign, and have your own agent with you from the first visit. More in Buying new construction direct or with a buyer's agent.
The bottom line
Earnest money is your commitment to the deal, and the standard Arizona contract gives you real protection as long as you use it correctly and on time. Know your deadlines, deliver your notices in writing, and never wire money without confirming by phone.
Send me a message if you'd like help deciding how much earnest money to offer, or if you have a question about a deadline. You can also read Understanding Arizona purchase contracts.
Questions, answered.
Who holds earnest money in Arizona?
It's usually held by the escrow company handling the closing, and it's credited toward your purchase at closing.
How much earnest money should I put down in Arizona?
There's no amount set by law. It's negotiated, and the right number depends on the price, the competition and your situation.
Do I get my earnest money back if I cancel during the inspection period?
Generally yes, under the standard Arizona contract, as long as you deliver your cancellation in writing before the inspection period ends.
How can I lose my earnest money?
By breaching the contract and not fixing it within the three day cure period after the seller delivers a Cure Period Notice.
Can earnest money be wired?
Yes, but always confirm wiring instructions by phone with the escrow company at a number you found yourself before you send it.
Want to talk it through?
Bring me the specifics of your situation and I will tell you straight what I would do. No pitch, nothing to sign, and no obligation to work with me afterward.
Ask me about earnest money