Making an offer on a Bloomington home? Your earnest money is often the first check you write, and it can shape how strong your offer looks. It also raises smart questions about how much to put down, when you can get it back, and how to protect it. In this guide, you will learn how earnest money works in Minnesota, typical amounts and timelines, what happens if a deal cancels, and practical steps to keep your deposit safe. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you provide after the seller accepts your offer. It shows you are serious and gives the seller confidence while you move through inspections, financing, and title review. The funds sit in escrow and are credited to your cash to close at settlement if you complete the purchase.
If the contract is canceled, what happens to the deposit follows the agreement. It may be refunded under a valid contingency, released by mutual agreement, or forfeited if you default under the contract terms.
Who holds it and when you deposit
In Minnesota, earnest money is commonly held by a title company or closing agent. Some deals use a broker’s trust account, and in fewer cases a real estate attorney holds the funds. Make sure your purchase agreement clearly names the holder, and get a written receipt showing the amount, who holds it, and the date received.
Contracts in Minnesota often require you to deposit earnest money within a short period after acceptance, commonly 1 to 3 business days. Your deadline is contract specific. Confirm the timeline in your executed offer and plan your delivery method in advance.
Typical amounts in Bloomington
Customary ranges often fall between $1,000 to $5,000 for lower-priced homes or about 1% to 3% of the purchase price for mid to higher price points. In more competitive Twin Cities submarkets and price ranges, larger deposits may strengthen your offer. You can also consider staged deposits, such as a smaller initial amount at acceptance and a larger second deposit within a few days, if the contract allows.
A higher deposit can signal commitment, but it also raises your risk if you miss deadlines or waive protections. Balance deposit size with clear contingency terms and realistic timelines.
Key timelines and contingencies
Inspection contingency
A typical inspection window is 5 to 15 days. This period lets you complete inspections, request repairs or credits, or cancel within the terms of the contingency. If you cancel properly within the deadline, your earnest money is usually refundable.
Financing and appraisal
A financing or loan commitment contingency often runs 21 to 45 days, depending on your lender and loan type. Appraisal timing is typically tied to the financing process. If the appraisal comes in low, you will have a defined window to respond under the contract.
Title review
Title review commonly provides 5 to 10 business days to review your title commitment and raise objections. If a title issue cannot be resolved per the contract, you may be able to cancel and receive a refund of your deposit.
If a deal cancels
Canceling under a contingency
If you cancel within a valid contingency and follow notice rules in the contract, your earnest money is usually refundable. Give written notice exactly as the agreement specifies and keep records, like inspection reports and lender communications.
Mutual release and disputes
Sometimes both parties agree to cancel and sign a mutual release that directs the escrow holder to return funds, often to the buyer. If the parties disagree, the escrow holder may need a written release or a court or arbitration order before disbursing the deposit, which can extend timelines.
Buyer default and seller remedies
If you fail to close without a contractual right to cancel, the seller may be able to keep the earnest money as liquidated damages if the contract provides for that remedy. The exact outcome depends on the specific language in your purchase agreement, so review the remedy clause closely.
Protect your earnest money
- Get everything in writing. Confirm the deposit amount, holder, deposit deadline, and release conditions in the purchase agreement.
- Verify the holder and get a receipt. Keep copies of checks, wire confirmations, and escrow receipts.
- Use a reputable title or escrow company. They handle funds regularly and follow established release procedures.
- Follow deadlines exactly. Submit written notices on time for inspections, financing, appraisal, and title items.
- Confirm trust account details if a broker holds funds. Ask for documentation that shows the deposit was made to a separate trust account.
- Guard against wire fraud. Verify wiring instructions by calling a known number for the title company before sending funds.
Use earnest money strategically
Win in competitive offers
A larger deposit, a faster deposit timeline, or shorter contingency windows can strengthen your position. Only tighten timelines you can realistically meet, based on inspection scheduling and your lender’s pace.
Keep flexibility where you need it
If you prefer not to increase risk, focus on strong financing terms and a flexible closing date instead of dramatically raising your deposit. Keep your earnest money refundable until key contingencies are waived, when possible under the contract.
Checklist and sample timeline
Checklist before you submit an offer
- Decide your earnest money amount and confirm the funds are available.
- Get a lender preapproval and include it with your offer.
- Identify the escrow holder in the offer and request written confirmation.
- Set realistic contingency deadlines you can meet.
- Confirm how and when you will deliver funds, such as check or wire.
- Line up your inspection schedule and share your lender contact details.
Sample timeline for Bloomington buyers
- Offer accepted: deposit earnest money within 1 to 3 business days, per contract.
- Inspection period: 7 to 10 days to inspect, negotiate, or cancel in writing.
- Financing: 21 to 45 days to obtain loan commitment and address appraisal.
- Title review: 5 to 10 business days to review and object if needed.
- Closing: on the contract date, with earnest money credited to cash to close.
Ready to move in Bloomington?
You do not have to guess your way through earnest money. We help you set the right deposit, choose protective timelines, and present a strong offer that fits Bloomington’s market. If you are planning to buy, connect with A Good Life Group for clear guidance and a local plan that protects your interests.
FAQs
What is earnest money in Minnesota and how is it used?
- It is a good-faith deposit held in escrow after your offer is accepted, then credited to your cash to close at settlement or released per the contract if the deal cancels.
How much earnest money should I offer on a Bloomington home?
- Common ranges are $1,000 to $5,000 for lower-priced homes or about 1% to 3% of the price, with higher amounts sometimes used in competitive segments.
When is earnest money refundable in Minnesota purchase agreements?
- It is usually refundable if you cancel properly under a valid contingency, such as inspection, financing, or title, and you follow contract notice rules and deadlines.
Who typically holds earnest money in Bloomington transactions?
- A title company or closing agent commonly holds funds. Some deals use a broker’s trust account or, less often, a real estate attorney. Your contract should name the holder.
How long does it take to get earnest money back after cancellation?
- If all parties sign a mutual release, refunds can be quick. If there is a dispute, the escrow holder may wait for written instructions or a court or arbitration order, which can take longer.
