Putting money at risk before you even own the home can feel intimidating. In Edina, earnest money is a normal part of making a strong offer and a key sign of your commitment to the seller. When you understand how much to offer, when it is due, and how your contingencies protect it, you can move forward with confidence. This guide explains Minnesota‑specific norms, Edina considerations, safe deposit steps, and real‑world scenarios so you can make smart decisions. Let’s dive in.
Earnest money basics in Minnesota
Earnest money is a good‑faith deposit you agree to deliver with your offer or shortly after acceptance. It is not an extra fee. At closing, it is typically credited toward your cash to close.
In Minnesota, the purchase agreement sets the rules for how earnest money is held, when it is due, and what happens if either party cancels or defaults. The escrow holder must follow the contract and applicable trust‑account or escrow rules. If a dispute arises, funds are held until the contract’s dispute process or a legal decision directs disbursement.
For buyers, a solid earnest deposit can make your offer more credible, especially in competitive Edina neighborhoods. For sellers, it can provide a form of protection if a buyer defaults, subject to the exact language in the contract.
Typical amounts in Edina
There is no single rule for how much you should offer. In many markets, buyers put down roughly 1–3% of the purchase price as earnest money. Fixed amounts, such as $1,000 to $10,000, are also common for mid‑priced homes.
In Edina, the amount varies based on price point, market competition, how strong your financing is, and whether you include or waive contingencies. Ask your agent to benchmark against recent accepted offers in the specific neighborhood you’re targeting.
Deposit timing and escrow holder
Your purchase agreement will set the deposit deadline. In practice, many Minnesota contracts require delivery within 24 to 72 hours after acceptance, though you can negotiate a different window. Always check whether the contract uses business days or calendar days.
The escrow holder is named in the agreement. In Edina and across Hennepin County, the deposit is commonly held by a title company or closing agent. Sometimes a broker trust account or an attorney holds it. The escrow holder must deposit funds promptly and maintain records. The deed recording with Hennepin County happens after closing and is separate from earnest money handling.
At closing, your earnest money appears as a credit on the settlement statement and is applied toward your cash to close.
Contingencies and refunds
Your contingencies, plus the timing and notice rules in your contract, determine whether the deposit becomes refundable or stays at risk.
Inspection contingency
If your contract includes an inspection period and you terminate within the allowed window using the required written notice, the earnest money is typically refundable. Missing the deadline or failing to deliver notice correctly can put the funds at risk if you later cancel.
Financing contingency
If you cannot obtain financing and you follow the contract’s financing contingency steps and timelines, your deposit is usually refundable. If you miss the loan commitment deadline or fail to send the required notices, the seller may claim you breached the contract.
Appraisal contingency
When an appraisal comes in low and your contract provides an appraisal contingency, you may have the right to renegotiate or terminate within a set timeframe. If you terminate properly within that window, you can usually recover the deposit.
Title review
If title defects are discovered and the seller cannot cure them as required by the contract, you may be able to terminate and receive a refund, provided you follow the contract’s notice procedures.
Waived contingencies increase risk
Waiving inspection, financing, or appraisal protections can strengthen your offer in multiple‑offer situations. It also increases the chance you will forfeit the deposit if you cannot close for reasons not protected by the contract.
Seller default and disputes
If a seller improperly cancels or fails to perform, you may be entitled to a return of your earnest money and possibly other remedies, depending on the contract. When parties disagree, escrow holders typically keep funds in trust until both sides agree in writing or the contract’s dispute process or a court order directs release.
Safe ways to transfer funds
Real estate wire fraud targets buyers and title companies. Treat wiring instructions with extreme caution and verify everything before you send money.
Follow these steps:
- Get wiring instructions in writing on the escrow holder’s letterhead or as a named exhibit to your purchase agreement.
- Verify the instructions by calling the escrow holder using a phone number you find on the company’s official website, not a number in an email.
- Ask for a named contact and confirm the account name, bank, and account number.
- Never click unexpected links or accept last‑minute changes without phone verification.
- After sending funds, request written confirmation of receipt. Save your bank wire receipt and the escrow holder’s confirmation.
- Keep a records folder with your purchase agreement, wiring instructions, and all confirmations.
- If permitted, consider alternatives such as a certified cashier’s check or verified ACH. Some escrow holders require wires for speed, so confirm their policy in advance.
What to do if fraud is suspected
Act immediately. Contact your bank to attempt a recall, notify the escrow holder and your agent, and file a report with law enforcement. Quick action can improve the chances of recovery, though it is not guaranteed.
Edina offer examples (hypothetical)
These sample scenarios illustrate how buyers in Edina might structure earnest money. Your exact strategy should reflect current local conditions and the specific contract you use.
Scenario A: First‑time buyer in a balanced market
- Example purchase price: $450,000
- Typical earnest money: $3,000 to $6,000
- Contingencies: 10‑day inspection, 21–28 day loan commitment
- Outcome: High likelihood of refund if you terminate within inspection or financing timelines per the contract.
Scenario B: Move‑up buyer in a competitive neighborhood
- Example purchase price: $800,000
- Typical earnest money: $8,000 to $24,000 or higher
- Contingencies: Shortened inspection window and tighter loan commitment to strengthen the offer
- Tradeoff: Higher deposit and narrower windows increase risk if you cannot close.
Scenario C: Cash offer or waived contingencies
- Earnest money: Often larger to signal commitment
- Protection: Fewer or no contingencies mean fewer contractual paths to a refund
- Risk: Greater chance of forfeiture if you default for reasons not covered by the contract
Quick buyer checklist
Use this simple list to stay on track:
- Confirm the named escrow holder and their deposit instructions.
- Note the deposit deadline and whether days are business or calendar.
- Calendar all key dates: inspection window, appraisal timeline, loan commitment date, title objection deadline, and closing.
- Send any termination or notice in the exact form and timeline the contract requires, and get confirmation of receipt.
- Verify wiring instructions by phone using a number from the company’s official website. Save all receipts and confirmations.
Final thoughts
In Edina’s dynamic market, earnest money helps your offer stand out while also carrying real risks if you miss deadlines or waive protections. The right amount, clear timelines, and careful wiring can make the process smooth and secure. If you want tailored guidance on earnest money and offer strategy for your next Edina purchase, reach out to the boutique team at David K Wells III Real Estate for one‑on‑one support backed by trusted local expertise.
FAQs
How much earnest money do Edina buyers usually put down?
- Common practice is roughly 1–3% of the purchase price or a fixed $1,000 to $10,000 for mid‑priced homes, adjusted for price point and competitiveness.
When is earnest money due after acceptance in Minnesota?
- Many contracts require delivery within 24 to 72 hours after acceptance, but your purchase agreement controls the exact deadline and whether days are business or calendar.
Who holds earnest money in Hennepin County transactions?
- The agreement names the holder, often a title company or closing agent; sometimes a broker trust account or attorney holds the funds.
When can I get my earnest money back in Minnesota?
- Refunds depend on contingencies and strict deadlines; if you terminate properly within the contract’s timelines, it is typically refundable.
What if the seller cancels the sale in Edina?
- If the seller defaults, you may be entitled to a return of your earnest money and potentially other remedies, subject to the contract’s terms.
What is the safest way to wire earnest money?
- Verify instructions by calling the escrow holder at a number from their official website, avoid relying solely on email, and keep wire and receipt records immediately after sending.
