Wondering how large your deposit should be to win a Point Loma Heights home without risking your cash? In this competitive pocket of coastal San Diego, earnest money often separates strong offers from the rest. You want to show commitment, protect your funds, and move quickly. In this guide, you’ll learn what earnest money is, local deposit norms, how contingencies protect you, and what happens if a deal falls through. Let’s dive in.
Earnest money basics in San Diego
Earnest money is your good‑faith deposit that shows a seller you intend to close. Once your offer is accepted, you deliver the funds and they are held in escrow. If the sale closes, the deposit is applied to your purchase price or closing costs under the contract. If the deal cancels under a valid contract contingency, your deposit is typically returned.
In California, escrow or a licensed trust account holds client funds in compliance with state rules. The escrow holder follows the written escrow instructions and the purchase contract. Your purchase agreement will spell out who holds the deposit and how it is handled from acceptance through closing.
Typical deposit amounts in Point Loma Heights
Point Loma Heights and nearby coastal neighborhoods are competitive, so local deposits tend to be higher than many national averages. Amounts are negotiable and depend on price point and seller expectations.
- Baseline in many markets: 1% to 3% of the purchase price.
- Common coastal San Diego range: 3% to 5% to signal a serious offer.
- Strong flat sums: $10,000 to $50,000 or more on higher‑priced homes.
Simple examples by price point
- On a $900,000 home, 3% equals $27,000, while 5% equals $45,000.
- On a $1.4 million home, 3% equals $42,000, while 5% equals $70,000.
- On a lower‑priced condo, a $10,000 deposit can look strong if aligned with the price and terms.
There is no single right number. Your agent can help set a deposit that fits the listing, competition, and your comfort level.
When and where your deposit is held
Your offer and the standard California purchase forms usually require you to deliver the initial deposit shortly after acceptance. A common timeline is within 3 business days, but always follow your contract’s exact deadline. Escrow will confirm receipt once funds arrive by wire or cashier’s check according to their procedures.
In most San Diego transactions, the deposit is held by the escrow or title company named in the contract. In some cases, a licensed broker’s trust account holds the deposit until escrow opens. Ask your agent and escrow officer for the proper wiring instructions and always verify them before sending funds.
How contingencies protect your deposit
Contingencies give you time to verify the property and financing. If a contingency is not satisfied and you cancel within the contract timeline and procedures, your earnest money is usually refundable.
Inspection contingency
Use your inspection window to check the home. If you find issues and cancel within the inspection period according to the contract, your deposit is typically returned. If you request repairs or credits and the seller refuses, you can usually cancel within the deadline and retain your deposit.
Loan contingency
If your lender ultimately denies financing and you provide timely written notice within the loan contingency period, your deposit is generally refundable. Keep documentation and respond quickly to lender requests to show good‑faith effort.
Appraisal contingency
If the appraisal is lower than the contract price, you can try to renegotiate. If no agreement is reached and you cancel under the appraisal or related loan contingency on time, your deposit protection typically applies per the contract language.
Title and disclosures
If a title issue arises that the seller will not cure, you may cancel per the title contingency and recover your deposit. California disclosure rules also require sellers to provide certain information. If a material issue emerges and you cancel in line with the contract’s disclosure provisions, the deposit is usually returned.
Timing and written notices
Competitive offers often include shorter contingency windows. Inspection periods can be as short as 5 to 10 days, and loan timelines often run 17 to 21 days, though all dates are negotiable. Protect yourself by tracking every deadline and giving all notices in writing exactly as the contract requires.
If the deal cancels or someone defaults
Canceling within a contingency
When you cancel under a valid contingency and follow the contract steps and timeline, escrow is instructed to return your deposit. Escrow may ask for a copy of your written cancellation and supporting documents, such as an inspection report summary or loan denial letter.
Buyer default
If you cancel without a contractual right, the seller may claim your deposit as damages. Many agreements include a liquidated‑damages clause that can allow the seller to keep the deposit within the contract limits. Always review your contract and consult your agent before removing protections or canceling outside a contingency.
Seller default
If the seller breaches the contract, you can typically recover your deposit or pursue other remedies available under the agreement. Escrow will not release funds without proper written instructions from both parties or a court order if there is a dispute.
Escrow disputes
If either side contests who should receive the deposit, escrow will hold funds until there is a signed release, settlement, or court order. Many contracts call for mediation or arbitration before litigation. Keep thorough records and stick to the contract’s notice procedures to support your position.
Buyer checklist for Point Loma Heights
Before you write an offer
- Get a full lender pre‑approval, not just a pre‑qualification.
- Decide how much deposit you can comfortably provide and what risk you accept if you shorten or waive contingencies.
- Talk with your agent about local expectations for deposit size and timelines.
When you write the offer
- State your initial deposit and any additional deposit due dates.
- Confirm the escrow holder and verify wire instructions with that company.
- Clearly set contingency dates and how notices will be delivered, then follow them exactly.
- If you waive a contingency, document your choice and understand the added risk to your deposit.
After acceptance
- Deliver your deposit on time and obtain written confirmation from escrow.
- Schedule inspections immediately to stay within your inspection window.
- Keep a record of all communications with your lender, inspector, seller, and escrow.
If you need to cancel
- Send written cancellation before the deadline and per the contract instructions.
- Provide any required documents, such as a loan denial or inspection summary.
- If the seller disputes the release, prepare for mediation or other resolution steps.
Offer‑strength ideas without adding unnecessary risk
- Pair a strong deposit with reasonable contingency timelines to stay protected.
- Consider non‑price terms the seller may value, such as a flexible closing date or a short rent‑back, if it fits your plans.
- If you consider appraisal gap language, review it with your agent and lender so you understand how it affects your cash and contingencies.
- When unsure, increasing the deposit amount can strengthen your offer while keeping key protections in place.
Final thoughts
In Point Loma Heights, a thoughtful earnest money strategy can help you stand out while keeping your funds safe. Focus on the right deposit size for your price point, deliver it on time, and use your contingencies wisely. Track every deadline and keep notices in writing so you preserve your options.
If you want a local plan tailored to your situation, let’s talk about your purchase timeline, deposit strategy, and contingency approach for the homes you like. Connect with Joe Corbisiero and the Dream Homes Team for neighborhood‑level guidance and a clear path to a winning offer.
FAQs
What is earnest money for a San Diego home purchase?
- It is a good‑faith deposit you provide after offer acceptance that is held in escrow and credited to you at closing or returned under valid contract contingencies.
How much earnest money should I plan for in Point Loma Heights?
- Plan for 1% to 3% as a baseline, but in coastal competition many buyers offer 3% to 5% or a strong flat sum that fits the property price and terms.
When do I need to deliver my deposit after acceptance?
- Most contracts require delivery within a short window, commonly about 3 business days, but you must follow the exact deadline written in your agreement.
How do contingencies protect my earnest money?
- If you cancel within the inspection, appraisal, loan, title, or disclosure timelines and follow notice procedures, your deposit is typically refundable under the contract.
What if I cancel without a contractual reason?
- You may be in default, and the seller could claim the deposit under the contract’s remedies, including any liquidated‑damages clause.
How does escrow release the deposit if there is a dispute?
- Escrow usually needs mutual written instructions or a court order; many agreements also require mediation or arbitration before litigation.
