Buying a home in Madison and wondering how much earnest money to put down? You are not alone. This good-faith deposit can help your offer stand out and also shapes your risk if things do not go as planned. In this guide, you will learn what earnest money is, typical amounts in Dane County, when it is refundable under Wisconsin offers, and how to craft a strong but safe offer. Let’s dive in.
Earnest money basics in Wisconsin
Earnest money is a deposit you provide after a seller accepts your offer. It shows you are serious, and if you close, it is credited toward your purchase price and closing funds.
In Wisconsin, the deposit is usually held in a neutral trust or escrow account. Common holders include a broker’s trust account, a title company, or an attorney escrow. Brokers and escrow holders must follow Wisconsin trust-account rules and handle funds according to the written offer.
Your deposit has two roles. It signals commitment to the seller, and it can serve as partial security if a buyer defaults under the terms of the contract. The standard Wisconsin offer form used in many transactions includes language that explains where the money is held and how it can be released.
How much in Madison and Dane County
There is no fixed or required amount for earnest money in Madison. The deposit is negotiated and shaped by market conditions and price point.
A common range for many buyers is either a flat dollar amount, such as $1,000 to $5,000 for lower-priced homes, or a percentage of the purchase price, often around 1 to 3 percent for mid to higher-priced homes. In more competitive periods, buyers sometimes increase the amount or shorten deadlines to strengthen an offer.
Local expectations vary with supply, demand, and price levels in Dane County. When homes are moving quickly, sellers may expect larger deposits and faster timelines. When the market is more balanced, modest deposits within the ranges above are often acceptable. Your agent can help you align your deposit with current conditions.
When your deposit is refundable
Whether you can get earnest money back depends on the written offer and how you use your contingencies and timelines. Wisconsin offers typically include several protective contingencies.
- Inspection contingency. You can inspect the home within a set period. If you timely object or elect to cancel under the terms of the contingency, the deposit is typically refundable as stated in the contract.
- Financing contingency. If your lender denies the loan and you acted in good faith, the offer usually allows for a refund of earnest money when you follow the notice steps in the contract.
- Appraisal contingency. If included, this allows you to address a low appraisal. If price negotiations do not resolve the difference, you may be able to cancel and receive a refund, according to the contingency language.
- Title and other conditions. Certain title or contract-specific items can also affect refund rights.
Your offer will set a deadline for delivering the deposit after acceptance. A common practice is 24 to 72 hours, but this is negotiable. It will also set deadlines for inspection and financing actions. If you remove contingencies and later default, the seller may have a claim to your deposit under the remedies in the contract.
Examples help clarify common outcomes:
- Refundable: You cancel within a valid inspection period after timely notice, or your loan is denied despite good-faith effort and you provide the required documentation within the deadline.
- Potentially nonrefundable: You waive contingencies up front, or you remove them and later fail to perform by the agreed timeline.
Make a strong but safe offer
The goal is to balance confidence with protection. Bigger or quicker deposits can help you stand out, but you should only increase risk where you are comfortable and informed.
- Consider raising the deposit or shortening the delivery window to 24 to 48 hours if you are prepared to fund quickly.
- Keep essential protections like inspection and financing contingencies if you need them. Shortening timelines can be effective only if you can schedule inspections and advance your loan in that window.
- Use clear dates. Spell out deposit delivery, inspection periods, and financing-objection deadlines so everyone understands the schedule.
- Confirm who holds the funds. It is standard to use a reputable title company, the listing or buyer broker trust account, or an attorney escrow.
- Get a receipt or confirmation after you deposit funds.
Checklist before increasing earnest money
- You have a current pre-approval or proof of funds.
- Your inspector can meet the proposed timeline.
- You understand every deadline and what triggers a refund or forfeiture.
- You know exactly who will hold the deposit and how to deliver it securely.
When to involve an attorney
- You are waiving financing or appraisal protections.
- The transaction involves unusual title matters or estate sales.
- A deposit dispute arises and the parties cannot agree on release.
Contract language to review closely
To protect your deposit and keep your offer competitive, make sure your written offer addresses these items clearly:
- Exact deposit amount and method, such as check, wire, or certified funds.
- Deposit delivery deadline, including whether days are calendar or business days.
- Name of the earnest money holder and the type of account.
- Inspection and objection deadlines, stated as clear dates.
- Financing contingency details, including what counts as lender denial and your good-faith duties.
- Appraisal clause, including how a short appraisal is handled.
- Remedies and dispute resolution language for releasing earnest money if you and the seller disagree.
- Any “non-refundable” language that increases risk. Understand the consequences before agreeing.
A clear, well-structured offer helps you compete while protecting your budget.
Ready to talk through your situation and tailor a strategy to today’s Madison market? Connect with The See Team for local guidance, careful drafting, and step-by-step support.
FAQs
If my loan is denied, can I get my earnest money back in Wisconsin?
- If your offer includes a financing contingency and you act in good faith, the contract typically allows a refund when you provide timely lender denial documentation and follow notice steps.
How fast do I need to deliver earnest money after an accepted offer in Madison?
- Your offer sets the deadline. A common practice is 24 to 72 hours, but the exact timing is negotiated and must match what is written in your contract.
Is earnest money automatically forfeited if closing is delayed?
- Not automatically. Whether the seller can keep the deposit depends on the contract terms, the reason for delay, and whether you are in breach. Clear communication often resolves timing issues.
Who holds my earnest money in Wisconsin and how is it protected?
- A neutral escrow, often a broker trust account, title company, or attorney escrow, holds the funds. These accounts are handled under Wisconsin trust-account rules and the terms of your written offer.
Can I get my earnest money back if the appraisal is low in Dane County?
- Only if your offer includes an appraisal contingency or makes appraisal a condition of your performance. Without that contingency, a refund is not automatic.
What is the difference between earnest money and an option fee?
- Earnest money is a good-faith deposit used in Wisconsin offers and applied at closing. An option fee is a separate concept used in other states and is not part of standard Wisconsin contracts.
