Buying a home in Avon is exciting, but the steps between “offer accepted” and “closing” can feel like a maze. One key step is the earnest money deposit. It is a small part of the purchase price, yet it carries big weight in your offer and your contract rights. In this guide, you will learn how earnest money works in Avon and Hendricks County, what buyers typically pay, how to protect your deposit with contingencies, and what to do if a problem arises. Let’s dive in.
What earnest money means in Avon
Earnest money, sometimes called a good-faith deposit, is money you put down to show you are serious about buying the home. If the sale closes, your deposit is credited toward your purchase price at closing. Sellers expect it because they are taking the property off the market for you.
Putting up earnest money can make your offer stronger. It shows commitment and gives the seller some protection if a buyer defaults after removing contingencies. It does not guarantee closing, and it does not replace inspection, financing, appraisal, or title protections. It is not an extra fee to the seller unless you breach the contract and the agreement allows the seller to keep it.
In modestly priced suburban markets like Avon, many offers include $1,000 to $5,000 in earnest money. In more competitive situations, buyers sometimes offer more or about 1 to 3 percent of the purchase price. For higher-priced homes or multiple-offer scenarios, deposits are often proportionately larger. The local market balance matters. In a seller’s market, a larger deposit can help your offer stand out. In a slower market, a smaller deposit may be accepted.
How the process works in Indiana
In Indiana, the written purchase agreement controls how earnest money is handled. Your contract should name who holds the funds, how and when they are delivered, and the rules for releasing the deposit.
When you pay
Most contracts require you to deliver the deposit shortly after both parties sign the agreement, commonly within 24 to 72 hours. The exact deadline is stated in the contract. You will usually provide a cashier’s check or wire the funds to the named escrow holder. Always confirm wire instructions directly with the title company or escrow officer by phone to avoid fraud.
Who holds your deposit
Your deposit is held in escrow by the entity named in the contract. In many Avon and Hendricks County transactions, the title company or closing agent holds the earnest money. Sometimes a real estate brokerage’s trust account or an attorney escrow account is used. The contract should clearly identify the escrow holder.
What to check in your contract
Review these details before you sign:
- Who is the escrow agent or title company holding your funds.
- The deposit due date and acceptable form of payment.
- Whether funds are held in an interest-bearing account and who receives any interest.
- The conditions and signatures required to release the deposit.
- The dispute resolution steps if there is a disagreement.
These terms work alongside your contingencies. While the earnest money timing is separate from inspections or financing, your contingency deadlines usually decide whether you can recover your deposit if you need to cancel.
How contingencies protect your money
Contingencies are your safety valves. They set conditions that must be met for the sale to move forward. If a valid contingency is not met and you follow the contract’s notice rules, you can usually cancel and receive a refund.
Common buyer protections include:
- Inspection contingency. Lets you inspect the home and either negotiate repairs, request credits, or cancel within a set timeframe.
- Financing contingency. Protects you if your loan is denied or not approved by the deadline despite good-faith efforts.
- Appraisal contingency. If the appraisal comes in low and the seller will not adjust price or terms, you can usually cancel.
- Title contingency. Allows you to cancel if title defects cannot be resolved.
- Sale-of-home contingency. Your purchase depends on selling your current home by a certain date. This is less common in competitive markets.
To keep your protections, meet all contingency deadlines and follow the termination steps exactly as written.
When you can get a refund
You are typically entitled to a refund of your earnest money if:
- You cancel within a valid contingency period and give notice in the way and time the contract requires.
- The seller breaches the agreement, such as failing to provide clear title or refusing to perform.
Each contract is different. The purchase agreement spells out the conditions that trigger a refund and who must sign to release the funds. Many title companies will only release money with mutual written instructions or a court order, so clear documentation and timely notices matter.
When you could forfeit it
A seller may be entitled to keep the deposit if you default without a valid contractual reason after contingencies are satisfied or waived. Common examples include failing to close on time or refusing to perform after protections are removed. Contracts often include language that allows forfeiture upon buyer default, subject to legal limits.
Do not assume an automatic refund if you change your mind after your contingency periods expire. The contract is the rulebook. If you are facing a potential forfeiture, contact your agent and a real estate attorney promptly.
Practical steps to protect your deposit
Before you write an offer
- Get a strong mortgage pre-approval, not just a prequalification. It shows you are ready to perform and reduces the risk of loan issues later.
- Discuss current Avon market conditions with your agent to decide how much earnest money helps your offer without adding unnecessary risk.
- Plan your contingency strategy. Decide which protections to include and set realistic timelines for inspections, appraisal, and financing.
Decide how much to offer
- Lower-competition setting: A smaller deposit, such as $500 to $2,000 on lower-priced homes, may work.
- Typical Avon deal: $1,000 to $5,000 is common.
- Competitive or higher-priced: Consider 1 to 3 percent of the purchase price. You can also offer to increase earnest money after the inspection period ends to strengthen your offer while keeping protections early on.
Keep a balance. A larger deposit can signal strength, but it also increases your exposure if protections are removed and a default occurs.
Pay safely and keep records
- Use traceable, secure methods: a cashier’s check to the named title company or a verified wire.
- Call the title company using a trusted, known number to verify wire instructions. Do not rely on email-only instructions.
- Get a receipt right away. It should show the amount, date, and confirm the funds were received for your specific contract.
Stay on top of contingencies
- Put every deadline on your calendar. Include inspection dates, response windows, appraisal, and financing milestones.
- If you need more time, ask for a written extension before the deadline expires.
- Follow the exact notice steps in your contract if you want to cancel or request repairs.
If a problem arises
- Notify the other party in writing within the contract window. Use the method your agreement requires.
- Keep detailed records. Save emails, inspection reports, lender updates, and notices.
- Loop in your agent and, if needed, a real estate attorney before funds are disbursed.
A simple timeline from offer to closing
- Offer accepted. You and the seller sign the purchase agreement.
- 24 to 72 hours. You deliver earnest money to the named escrow holder.
- Inspection period. You complete inspections, negotiate repairs, or cancel if allowed.
- Appraisal and financing. The lender orders the appraisal and finalizes your loan approval.
- Title review. The title company resolves any title issues before closing.
- Final approval and walk-through. You confirm the property condition and loan is clear to close.
- Closing day. Your earnest money is credited to your purchase price.
Local notes for Avon and Hendricks County
- Title companies commonly hold earnest money in Indiana. Confirm the escrow holder named in your contract and request immediate confirmation of deposit.
- Many Avon offers include $1,000 to $5,000 in earnest money, with higher amounts or percentages used for competitive or higher-priced homes.
- Deadlines matter. Delivering funds late or missing a contingency window can put your deposit at risk.
- If an earnest money dispute occurs, release often requires mutual written instructions or a court order. Some disputes are resolved through mediation or other procedures listed in your contract.
The bottom line for Avon buyers
Earnest money is a smart way to show commitment and win a seller’s confidence. In Avon and Hendricks County, typical deposits range from a flat amount on lower-priced homes to 1 to 3 percent on higher or competitive deals. Your contract controls how the funds are handled, when you can get them back, and when you could forfeit them. By planning your contingencies, meeting deadlines, and paying securely, you can protect your deposit and move toward closing with confidence.
If you want a local strategy tailored to your budget and the current Avon market, reach out to Chaggar & White Realty to get started. Request your personalized market consultation.
FAQs
What is earnest money in Avon home purchases?
- It is a good-faith deposit that shows you are serious about buying. If the sale closes, the money is credited toward your purchase price.
How much earnest money do Avon buyers usually put down?
- Many offers include $1,000 to $5,000. In competitive situations or higher-priced homes, deposits are often 1 to 3 percent of the purchase price.
When is earnest money due after offer acceptance?
- Most Indiana contracts require delivery within 24 to 72 hours. Your purchase agreement will state the exact deadline and payment method.
Who holds my earnest money in Hendricks County?
- The escrow holder named in your contract, often a title company or closing agent in Indiana, holds the funds until closing or release.
Can I get earnest money back if I cancel the purchase?
- Yes if you cancel within a valid contingency period and follow notice rules. If you cancel outside those protections, you may risk forfeiture.
What happens if the appraisal is lower than my offer?
- If you have an appraisal contingency, you can renegotiate, bring additional funds, or cancel according to the contract. Without it, your deposit may be at risk.
How do I avoid wire fraud when paying earnest money?
- Call the title company using a trusted phone number to verify instructions, use secure methods, and never rely on emailed wiring directions alone.
What if the seller refuses to release my earnest money?
- Many escrow holders require mutual written instructions or a court order. Check your contract for mediation or dispute procedures and contact your agent or an attorney.
