What Is Earnest Money When Buying a Home in Florida?

If you’re buying a home in Sarasota or Charlotte County (or anywhere in Florida), chances are you’ll hear the term “earnest money” come up right away. But what exactly is earnest money, how much is it, and what happens to it once you put it down? Let’s break it down in simple, buyer-friendly terms.

What Is Earnest Money?

Earnest money is a good-faith deposit a buyer makes when going under contract on a home. It shows the seller that you’re serious about purchasing and gives you a little “skin in the game” while the contract moves forward.

Think of it as a security deposit for your home purchase—except instead of going to the landlord, it goes to the title company or closing agent.

When Is Earnest Money Due?

The timeframe for earnest money is negotiated in your contract. A common deadline is within 3 days of the effective date of the contract, but it could be shorter or longer depending on the agreement.

👉 Example: If your contract is signed and becomes effective on Monday, and the deadline is 3 days, your earnest money would be due by Thursday.

Who Holds Earnest Money?

In Florida, earnest money is usually deposited with the title company handling the closing. This ensures the funds are secure and properly accounted for. The money doesn’t go directly to the seller—it’s held in escrow until the transaction closes (or cancels).

How Much Earnest Money Do You Need?

The amount is negotiable between the buyer and seller.

• In Sarasota County, earnest money deposits typically range from 1% to 3% of the purchase price, depending on the home and the competitiveness of the market.

• On higher-priced homes, sellers may expect a larger deposit.
  

What Happens to Your Earnest Money?

Here’s what you need to know about how earnest money is handled:

✅ It applies to your purchase. At closing, your earnest money is credited toward your down payment or closing costs.

✅ You can get it back if you cancel during the inspection period. If you decide to back out of the deal during your inspection (also known as the due diligence period), your earnest money is typically refundable.

❌ You can lose it if you break the contract outside of your contingencies. For example, if you back out for no contractual reason after the inspection period, the seller may be entitled to keep the deposit.

Why Earnest Money Matters

For sellers, earnest money provides reassurance that the buyer is committed.

For buyers, it’s part of showing good faith and standing out in a competitive market.

Since the terms are negotiable, having an experienced Realtor® on your side is key—we help you understand the right amount to offer and how to protect your money with the right contingencies.

Bottom Line

Earnest money is a small but powerful part of the homebuying process. It protects both buyers and sellers, ensures everyone is serious about moving forward, and applies directly to the cost of your home at closing.

📲 If you have any questions about earnest money, inspections, or buying a home in Sarasota County, reach out to us today. We’ll walk you through every step so you feel confident from contract to closing. Call or text us anytime: (941) 202-2212 Kyle & Ashlyn.