Are you wondering how much earnest money you should offer in Beverly Hills and what happens to it once your offer is accepted? You want to be competitive without taking on unnecessary risk. With the right strategy, your deposit can strengthen your offer while staying protected by smart contingencies. In this guide, you will learn how earnest money works in California, what is typical in Beverly Hills by price tier, and how to pair your deposit with offer terms that match your goals. Let’s dive in.
Earnest money basics in Beverly Hills
Earnest money is a good-faith deposit you provide after your offer is accepted. It shows the seller you intend to move forward and helps take the property off the market while escrow is open. If the sale closes, the funds are credited toward your purchase.
In California, the deposit is typically placed in a neutral escrow or trust account. An escrow or title company usually holds the funds, although the listing broker can hold them in a client trust account. Your purchase agreement will spell out who holds the money, when you must deposit it, and how it can be released.
Your earnest money is separate from your down payment and closing costs. It will be applied as a credit on your settlement statement at closing. If escrow does not close, disbursement follows the contract and any applicable contingency terms.
The California Association of Realtors forms and standard escrow practices are widely used in Los Angeles County. These forms set clear timelines for deposits and contingency periods. Always review deposit handling and deadlines with your agent and escrow officer so you understand how your funds are protected.
How much to offer in Beverly Hills
There is no fixed rule for deposit size. You will hear 1 to 3 percent as a national shorthand, but in Beverly Hills, dollar amounts often matter more than percentages. Price tier, competition, and whether you are paying cash or financing all play a role.
Entry luxury and lower tiers
For smaller homes or condos in the low to mid seven figures, buyers often offer around 1 to 3 percent in balanced conditions. On a hypothetical 2,000,000 dollar purchase, that could be 20,000 to 60,000 dollars. In softer conditions, some buyers go lower if other terms are strong.
Mid luxury, roughly 2M to 5M
In this range, deposits often move toward 2 to 4 percent to signal stronger intent. Dollar amounts commonly run from the high tens of thousands into the low six figures. The final number depends on competition and what else your offer includes.
High-end and trophy properties, 5M and up
At the top of the market, larger single-digit percentages or significant flat-dollar deposits are common. It is not unusual to see 50,000 to 500,000 dollars or more, depending on the property and offer strategy. Some buyers increase the deposit to stand out in multiple-offer situations.
Cash and institutional buyers
Cash buyers sometimes use smaller earnest money because they offer other strengths like a short close or waived financing terms. Others choose a large deposit to send a strong signal. The right approach depends on your overall strategy.
When to go bigger vs smaller
Consider a larger deposit when:
- You are in a seller’s market with multiple offers.
- The seller wants a quick close and you can meet that timeline.
- You are financing and competing against cash buyers.
You might justify a smaller deposit when:
- You are paying cash and showing strong proof of funds.
- You need more protective contingencies.
- The property is facing weak demand and competition is limited.
Contingencies that protect your deposit
Contingencies set clear conditions for your due diligence and financing. If you cancel within a contingency period in line with the contract, your earnest money is typically refundable.
Inspection contingency
This allows you to inspect the property and request repairs or cancel during the inspection window. If you cancel within the timeline and follow the contract, the deposit is usually returned. Keep records of reports and communications in case questions arise.
Loan and financing contingency
If you cannot secure the mortgage within the agreed period, you can cancel under this contingency. When you do it properly and on time, your funds are generally returned. This is a key protection for financed buyers.
Appraisal contingency
If the property appraises below the purchase price, this contingency lets you renegotiate or cancel. If you cancel under the terms, the deposit is typically refunded. Waiving this protection increases risk and may require more cash if the appraisal is low.
Title contingency
If a title issue surfaces that cannot be resolved as specified in the contract, you can cancel and recover your deposit. Your escrow officer and agent will guide you through notices and timelines.
Sale-of-home contingency
Your purchase can be tied to the sale of your current home. If that sale does not close within the agreed timeline, this contingency can protect your deposit if you cancel properly.
What happens when you remove contingencies
Contracts set deadlines for each contingency. When a contingency is satisfied or waived, you will sign a removal. Once removed, your earnest money becomes more exposed.
If you later cancel without a contract basis, the seller can usually claim the deposit as damages, subject to the contract and state law. Discuss any liquidated damages clause with your agent so you understand remedies and risks.
Common outcomes for your deposit
- You cancel properly before removing contingencies. Your deposit is refunded.
- You miss a deadline and do not cancel correctly. The seller may claim the funds as default damages.
- You remove contingencies, then cancel without cause. You likely forfeit the deposit.
- The seller defaults, such as failing to deliver clear title. You may recover your deposit and pursue remedies.
Offer-strength strategies that pair with earnest money
Your deposit is one signal in a broader offer strategy. Strong offers blend the right deposit with clear proof of funds, thoughtful contingency terms, and seller-friendly timing.
Main levers sellers notice
- Larger earnest money deposit that fits the price tier and competition level.
- Size and timing of down payment, with credible proof of funds and pre-approval.
- Contingency terms that are shorter or more limited, balanced with your risk tolerance.
- All-cash terms or waived appraisal or loan contingencies if you can accept the risk.
- Escalation clauses or pricing strategies that address bidding wars.
- A closing timeline and occupancy plan that match the seller’s needs.
Practical strategies by buyer profile
- Financed buyers competing with cash: Increase your deposit and tighten timelines without fully waiving key protections. You might keep appraisal protection but shorten inspection and loan periods.
- Cash buyers: Show proof of funds and offer a quick close. You can consider a modest deposit if other terms are strong, or increase it if you need to stand out.
- Protection-focused buyers: Use standard deposit levels and shorter inspection windows. Provide a strong pre-approval and a clean offer package to stay competitive.
Two quick examples
- 2,000,000 dollar listing with moderate competition: 2 percent deposit at 40,000 dollars, 10 to 17 day inspection window, 21 to 30 day loan timeline, full pre-approval letter.
- 6,000,000 dollar listing with multiple offers: 3 to 5 percent deposit at 180,000 to 300,000 dollars, 7 to 10 day inspection, appraisal contingency waived by a cash buyer or a buyer with strong bridge financing, 30 day close.
Your pre-offer checklist for Beverly Hills
Before you submit your deposit, confirm the following with your agent and escrow officer:
- Who will hold the earnest money and where it will be deposited.
- The exact deposit deadline after acceptance.
- Which contingencies you are including and each deadline.
- How the deposit is returned if you cancel within a contingency period.
- Whether the contract includes a liquidated damages clause or other remedy language.
- Proof of funds and a lender pre-approval that matches your purchase price.
- The closing timeline, any rent-back terms, and seller-specific requests.
Common mistakes to avoid
- Offering a small deposit in a high-competition setting without other strong terms.
- Waiving key contingencies without a clear plan for the risks.
- Missing contingency or deposit deadlines due to poor communication.
- Assuming percentages matter more than meaningful dollar amounts in the luxury tier.
- Failing to align closing timing with the seller’s needs when it costs you leverage.
Work with local pros who know the process
In Beverly Hills, most deals use standard California forms and escrow procedures. The details matter, from deposit timelines to contingency removals and instructions for releasing funds. A knowledgeable agent and a reputable escrow or title company keep you on schedule and reduce risk.
If you want a competitive offer strategy that fits your goals and risk tolerance, partner with a local team that blends market insight with hands-on guidance. Reach out to the Baharian Group to discuss your plan and tailor your deposit, contingency, and timing strategy to the property you want.
FAQs
Is earnest money refundable in California home purchases?
- Yes, it is typically refundable if you cancel within your contract contingencies and follow the timelines and procedures in the agreement.
What percentage of earnest money is typical in Beverly Hills?
- There is no single rule. Lower tiers often see about 1 to 3 percent, mid tiers 2 to 4 percent, and top tiers can be higher single digits or large flat amounts.
Can earnest money be used for closing costs at settlement?
- Yes. At closing, your deposit is credited toward your purchase price, down payment, or closing costs as shown on the final settlement statement.
What happens to my deposit if the seller backs out in Beverly Hills?
- If the seller defaults, such as failing to deliver clear title, you may recover your deposit and have additional remedies depending on the contract.
Should I waive the appraisal contingency in a bidding war?
- It can strengthen your offer, but it increases risk if the appraisal comes in low. You may need extra cash to close, so weigh your risk tolerance and financing strength.
