Earnest Money in Washington: How Much, Who Holds It, How You Get It Back
Earnest money is the deposit that makes your offer credible — and the money genuinely at risk if things go wrong. Washington has clear rules about how much you can lose and clean paths to getting it back. Know them before you sign, not after.
How much is normal in King County
Typical earnest money runs 1%–3% of the purchase price — $8,000–$24,000 on an $800,000 home. In competitive bidding, larger deposits (sometimes 5%) signal commitment. The funds are usually wired to the escrow or title company within 2–3 days of mutual acceptance and sit in trust; at closing they simply apply toward your down payment and closing costs.
The 5% cap that protects you
When your contract checks the liquidated-damages box (standard on NWMLS forms), Washington law caps the seller's recovery at earnest money up to 5% of the purchase price if you default. That cap is why sellers rarely ask for more than 5% — and why you should understand that a checked box means your worst case is losing the deposit, not being sued for more.
The clean exits: when you get it all back
Every exit has a deadline and a notice requirement. Missed deadlines convert protected deposits into forfeited ones — this is the single most valuable thing a sharp buyer's agent manages for you.
- Financing contingency: your loan is denied despite good faith — proper notice returns your deposit.
- Inspection contingency: you disapprove within the deadline — no reason required on the standard form.
- Form 17 rescission: within 3 business days of receiving the seller disclosure.
- Title review: you object to an encumbrance the seller can't clear.
- Condo resale-certificate review window.
- Seller default: the seller fails to perform — you recover the deposit and may have further remedies.
When it's contested
If buyer and seller both claim the deposit, the escrow holder doesn't judge — Washington law gives the holder a demand procedure: it notifies both parties, and if no timely objection lands, releases the funds; otherwise it can interplead the money to court and step aside. Practically, most disputes settle, because legal costs quickly exceed the deposit. The best strategy is upstream: written contingency notices, on time, every time.
Official sources
This information is for education only — it is not financial, legal, or tax advice. Loan rates, program rules, and limits change; always verify current details with a licensed lender, your agent, and official sources before making decisions.