Are you wondering how much earnest money you should put down on a Tigard home and what happens to it if plans change? You are not alone. This small but important deposit can shape how competitive your offer looks and how protected you are if the deal does not close. In this guide, you will learn what earnest money is, how it works in Tigard and the Portland metro, and how to keep your deposit safe. Let’s dive in.
Earnest money basics
Earnest money is a good faith deposit you include with your offer to show the seller you are serious. If the sale closes, that deposit is typically applied to your down payment or closing costs. If the sale does not close, what happens next depends on your contract and whether you followed the rules for any contingencies.
In Oregon, the Residential Purchase Agreement (often called the RPA) spells out the amount, where the deposit goes, and how it can be released. Funds are usually delivered to a neutral escrow or title company, or to a brokerage trust account named in the contract. These accounts are regulated, and you should receive a receipt showing the deposit and who holds it.
Why it matters: a strong earnest money deposit can help your offer stand out, especially in a competitive Tigard neighborhood. It also gives the seller some protection if you breach the contract without a permitted reason.
How much to offer in Tigard
There is no single “right” number. In the Portland metro, earnest money is commonly set as a percentage of the purchase price, often in the 1 to 3 percent range, or as a flat amount. The exact figure depends on price point and how competitive the market feels at the moment.
- In a tighter sellers’ market with limited inventory, buyers may increase the deposit to strengthen their offer.
- In a slower market, smaller deposits or more conservative contingency terms are more common.
Your goal is to balance competitiveness with protection. Offer enough to demonstrate commitment, but make sure your contract’s contingencies and timelines are realistic for you.
Where the money goes and when
Your purchase agreement will state how soon the deposit must be delivered. That window is measured in business days from mutual acceptance, and it is a binding contract deadline. Do not assume it can slide.
Most Tigard buyers deliver earnest money to the escrow or title company named in the contract. The holder places the funds in a trust or escrow account and keeps them there until closing or until both parties agree on another outcome under the contract.
Always get and keep a copy of the deposit receipt, plus the escrow contact details. This paper trail helps if questions arise later.
Contingencies that protect your deposit
Contingencies are your safety valves. If you cancel within a contingency period and follow the contract’s notice rules, your earnest money is typically refundable. Common protections include:
- Inspection contingency: lets you inspect the home and cancel or negotiate within a set period if you are not satisfied.
- Financing contingency: protects you if your loan cannot be approved on time under the agreed terms.
- Appraisal contingency: applies if the home appraises below the purchase price and you cannot reach a new agreement.
- Title contingency: covers unresolved title problems that cannot be cured.
- Sale-of-home contingency: ties your purchase to the successful sale of your current property.
To keep your deposit safe, follow notice procedures exactly and meet every deadline. Written notice within the stated period is essential.
When earnest money can be forfeited
If you breach the contract without a permitted reason, the seller may claim the earnest money as liquidated damages, subject to the contract and Oregon law. Common risks include missing deadlines, failing to deliver required documents or funds, or just changing your mind after contingencies have been waived or expired.
If there is a disagreement, escrow will often hold the funds until both parties sign release instructions or a court order determines the outcome. Many Oregon contracts also include dispute resolution steps, such as mediation or arbitration. Litigation is a last resort since it can be time consuming and costly.
A step-by-step checklist for Tigard buyers
- Confirm the deposit amount, recipient, and delivery deadline in your signed purchase agreement.
- Deliver the funds by the required method within the contract’s timeframe.
- Obtain and save the deposit receipt and escrow contact information.
- Calendar every contingency deadline: inspection, financing, appraisal, title, and closing.
- Order inspections and start loan underwriting promptly to avoid delays.
- Provide required written notices on time if you plan to cancel under a contingency.
- If you need more time, request an extension in writing and get the seller’s written agreement.
Common scenarios and outcomes
- Low appraisal: If the property appraises below the purchase price, your appraisal contingency may allow you to renegotiate or cancel. If you cancel within the contingency period and follow notice rules, your deposit is typically refundable.
- Loan denial: If your financing contingency is active and you are denied under the agreed terms, you may cancel and recover your earnest money, provided you meet notice requirements.
- Inspection issues: If the inspection reveals concerns and you cannot reach an agreement on repairs or credits, you can usually cancel within the inspection period and keep your deposit.
- Change of mind: If you simply back out after contingencies have expired or have been waived, you risk forfeiting the deposit. Read your contract carefully before making that decision.
Tips to avoid deposit mistakes
- Use a reputable escrow or title company and confirm wiring instructions by phone with a verified number before sending funds.
- Keep digital and paper copies of the signed purchase agreement and deposit receipt.
- Track every deadline and set reminders a few days in advance.
- Communicate with your lender and inspector early so you do not miss financing or inspection periods.
- Avoid waiving key contingencies unless you fully understand the risk.
- If anything is unclear, ask your buyer’s agent. For legal questions about forfeiture or disputes, consider speaking with a real estate attorney.
Local context: Tigard and the Portland metro
Tigard sits within Washington County and follows common Portland-area practices for offers and escrow. Deposit expectations vary by neighborhood, price band, and how quickly listings are moving at a given time. In a fast-moving pocket of Tigard, a higher deposit can help your offer stand out. In a slower segment, you may not need to stretch as far.
Because conditions change, base your deposit strategy on current local data and guidance. Your agent can synthesize active and pending listing trends, recent closed sales, and seller preferences to calibrate both amount and contingency timing.
What to watch closely in your contract
- Delivery timing: Know the exact number of business days you have to deliver earnest money.
- Who holds funds: Confirm the escrow or title company and how to get a receipt.
- Contingency periods: Write down the start and end dates for inspection, financing, appraisal, and title review.
- Notice rules: Keep a template ready for written notice so you can act quickly if needed.
- Release conditions: Understand what must happen for money to be released if the sale does not close.
How Peak Realty supports Tigard buyers
You deserve clear guidance and a steady hand from the moment you write an offer. Our team helps you structure a deposit that matches the Tigard submarket you are targeting, organizes inspection and financing timelines, and tracks every deadline so your earnest money stays protected. If issues arise, we help you navigate notices and negotiate solutions.
Thinking about your next move in Tigard or the surrounding suburbs? Let’s talk through your goals and build a smart offer strategy.
Ready to buy with confidence? Connect with Peak Realty to put a local, responsive team on your side.
FAQs
How much earnest money should Tigard buyers plan for?
- Many buyers use 1 to 3 percent of the purchase price or a flat amount, adjusted for price point and competitiveness. The right number depends on current Tigard market conditions.
Who holds earnest money in Oregon home purchases?
- Funds are typically deposited with a neutral escrow or title company named in the purchase agreement, or a brokerage trust account identified in the contract.
When is earnest money due after an offer is accepted?
- The Residential Purchase Agreement sets the deadline in business days from mutual acceptance. Check your signed contract and deliver on time.
What contingencies make earnest money refundable?
- Inspection, financing, appraisal, title, and sale-of-home contingencies generally protect deposits when you cancel within the stated periods and follow written notice rules.
What if my loan is denied or the appraisal is low in Tigard?
- If those contingencies are in place and you act within the timelines, you can usually cancel and recover your deposit. Confirm the steps and deadlines in your contract.
Can the seller keep my earnest money if I change my mind?
- If you cancel after contingencies are waived or expired and without a permitted reason, you may forfeit the deposit. Review your contract before making that decision.
What documentation should I receive after I pay earnest money?
- Obtain a deposit receipt from the escrow or title company and keep your signed purchase agreement. Save these along with any written notices you send or receive.
Is earnest money a tax or fee for Tigard homebuyers?
- At closing, earnest money is applied to your cash to close. If it is forfeited, ask a tax professional about implications for your situation and keep all records for reference.
