Earnest Money in Colorado Springs: What Buyers Should Know

Buying a home in Colorado Springs comes with a new set of terms, and earnest money is one you will hear right away. It can feel like a big commitment to move thousands of dollars right after your offer is accepted. The good news is this deposit is designed to protect both sides and is typically credited to you at closing. In this guide, you will learn how earnest money works in El Paso County, how much to offer, how to keep it protected, and when it could be at risk. Let’s dive in.

What is earnest money

Earnest money is a good faith deposit that shows a seller you are serious. It is not an extra fee. If the sale closes, your deposit is credited toward your purchase price or closing costs. If you cancel within your contract contingencies and deadlines, it is typically refundable.

In Colorado, most buyers rely on contract contingencies and timelines to protect their deposit. Some offers may also include separate nonrefundable deposits, but those are negotiable and must be spelled out in the contract.

Typical amounts and timing in Colorado Springs

How much you offer can vary by price point and market conditions. Local practice in Colorado Springs often looks like this:

• For many entry to mid price homes: about 1,000 to 5,000 dollars.
• For higher priced homes: roughly 1 to 2 percent of the purchase price.
• In competitive or cash situations: larger deposits or nonrefundable parts may be used to stand out.

Timing matters. Contracts here usually require you to deliver the deposit within 24 to 72 hours after mutual acceptance. Your exact deadline will be written in your contract, so plan to move funds quickly.

Who holds your deposit in Colorado

Your contract will name who holds the funds. In Colorado, it is common for a title company or an escrow agent to hold the money. A listing broker or buyer’s broker can also hold it in a brokerage trust account.

Brokers and title companies must follow Colorado Division of Real Estate rules for trust accounts and records. Always ask for a written receipt once your deposit is received, and keep your own confirmation for your files.

Contingencies that protect your deposit

Your contract includes deadlines and protections that control if and when your earnest money is refundable. Common examples include:

• Inspection contingency and a deadline to submit objections or terminate.
• Financing contingency tied to loan approval and underwriting.
• Appraisal contingency if the home must appraise at or above the purchase price.
• Title review and HOA document review contingencies.

If you terminate within an applicable contingency and follow the notice procedure and deadline, your deposit is typically refunded.

When your deposit is at risk

Your earnest money can be at risk if you miss a deadline or try to cancel after contingencies have expired. In that case, the seller may be entitled to keep the deposit as liquidated damages or pursue other remedies, depending on the contract.

Most title companies and brokers require written instructions from both parties to release funds. If you and the seller disagree, the contract’s dispute steps may include mediation, an interpleader, or court action. Keep clear records of notices and deadlines to support your position.

Applying earnest money at closing

If the sale closes, the deposit appears as a credit on your closing statement. It reduces the cash you need to bring for your down payment or closing costs. If the sale cancels properly under a contingency, your deposit is returned and no credit is applied since there is no closing.

Special situations to know

Cash offers and waived contingencies

Cash buyers sometimes raise the deposit and shorten timelines to strengthen an offer. If you waive contingencies, you take on more risk and should expect the deposit to be at greater risk if you later try to cancel.

Appraisal gap strategies

When you expect an appraisal shortfall, you may use an appraisal gap clause or raise your deposit to signal commitment. Whether extra funds are refundable depends on the exact language in your contract. Make the terms clear and in writing.

Post inspection increases

Some buyers increase the deposit after a satisfactory inspection to show continued good faith. Your agent should document if the added funds are refundable or nonrefundable, and under what conditions.

Nonrefundable deposits

Nonrefundable money is a negotiated term and should be explicit. If the contract does not clearly state nonrefundable terms, the default refund rules in the contingencies usually apply.

A buyer checklist for Colorado Springs

Use this quick plan to protect your deposit and stay competitive:

• Decide on amount: Start with local norms. Use 1,000 to 5,000 dollars for many homes or 1 to 2 percent for higher prices. Adjust for multiple offers or waived contingencies.
• Name the holder and deadline: Identify the title or escrow company in the contract and confirm the delivery window.
• Safeguard your funds: Wire only to verified instructions and confirm by phone with the title company. Keep receipts for wires or checks.
• Track every deadline: Inspection, appraisal, loan, title, HOA, and deposit delivery. Put reminders on your calendar.
• Keep it written: If you change deposit size or contingency terms, sign a written amendment.
• Clarify release steps: Know how earnest money will be released and what happens if there is a dispute.
• Plan for increases: If you will raise the deposit after inspection, decide whether the added money stays refundable.

Avoid common pitfalls

• Missing a deadline and losing refund rights.
• Assuming a conversation changed the contract without a signed amendment.
• Wiring funds to the wrong account. Always verify instructions with the title company by phone.
• Agreeing to nonrefundable terms without understanding the risks.
• Delivering late. Your offer looks stronger when you meet or beat the deposit deadline.

Local guidance you can count on

You deserve a clear plan for your earnest money and a smooth path to closing. Our team helps you size your deposit for today’s Colorado Springs market, structure the right protections, and deliver on time. If you are relocating, buying your first home, or moving within El Paso County, let us guide you from offer to keys.

Have questions about your next step or want a tailored deposit strategy for a specific home? Connect with Scott Coddington for local, client‑first guidance.

FAQs

Who holds earnest money in Colorado Springs real estate sales

• The contract names the holder, commonly a title company or a broker’s trust account. Ask your agent who will hold it and get a written receipt.

Is earnest money refundable for Colorado buyers

• It is typically refundable if you cancel within an applicable contingency and meet the contract deadlines. If you breach after deadlines, the seller may be entitled to it.

How soon do I have to deliver the deposit after my offer is accepted

• Most contracts require delivery within 24 to 72 hours of mutual acceptance. Your exact timeline is in the contract, so be ready to send funds quickly.

What happens if the seller will not sign to release my earnest money

• The holder often needs written release instructions. If you followed the contract to terminate, the dispute steps may include mediation or an interpleader. Keep all documentation.

How much earnest money should I offer to be competitive in El Paso County

• A common range is 1,000 to 5,000 dollars for many homes or about 1 to 2 percent for higher priced homes. Increase in tight, multiple offer situations after discussing risks with your agent.