Putting thousands of dollars on the line before you even get the keys can feel risky. If you are shopping in Garden City, you might be wondering how earnest money works, how much to offer, and what happens if plans change. You deserve clear answers so you can write a confident offer and protect your budget. This guide explains what earnest money is, typical Long Island deposit ranges, when it is refundable, and how to use it strategically in Garden City. Let’s dive in.
Earnest money basics
Earnest money, also called a good‑faith deposit, is money you put down when your offer is accepted to show you are serious about buying. It is part of your total cash to close. At settlement, the deposit is usually applied to your down payment and closing costs.
In New York, the deposit is held in an escrow or trust account. It is commonly held by the listing broker, a real estate attorney for the buyer or seller, or a title or escrow company. New York rules require that client funds are kept separate and properly accounted for.
Your contract should spell out the deposit amount, who holds the funds, how the funds will be handled, and the conditions for refund or release. Make sure this is in writing before you send any money.
Typical Garden City deposits
Garden City is in Nassau County on Long Island, where prices are often higher and competition can be strong. Deposit customs reflect this. While every deal is negotiated, you will typically see the following ranges:
- In many U.S. markets, typical earnest deposits are around 1% to 3% of the purchase price.
- In more competitive segments of Long Island, buyers often offer 2% to 5% or more to strengthen an offer.
- For lower‑priced homes, some buyers use a flat dollar amount, often $5,000 to $20,000. For mid and higher price points, a percentage is more common.
A larger deposit can make your offer stand out, especially if you can show proof of funds and deliver it quickly. Local practices shift with market cycles, so align your strategy with current conditions.
When deposits are refundable
Your deposit is generally refundable while you are acting within the contract’s contingencies and deadlines. The contract sets the rules, so know your dates and notice requirements.
Mortgage contingency
If you cannot obtain financing by the mortgage commitment deadline and you have made a good‑faith effort to secure your loan, many contracts allow you to cancel and receive a refund. You must usually provide timely written notice to the seller and the escrow holder.
Inspection contingency
If the inspection reveals material issues and you follow the contract’s steps and timing, you can often cancel or negotiate repairs or credits. If you cancel within the set period, your deposit is typically refundable.
Attorney review in New York
Many New York residential deals include a short attorney review period. During this window, which is often two to three business days but set by the contract, either party may withdraw. If that happens, the deposit is usually returned to the buyer.
Title and other contingencies
Title, appraisal, and specific addenda can also protect your deposit. If a title search reveals a problem that cannot be resolved by closing, or another negotiated contingency is not satisfied in time, you may have a right to cancel and receive a refund.
When funds risk forfeiture
Your deposit can become non‑refundable when the protections tied to it are removed or expire. Watch these situations closely:
- You waive or allow contingencies to expire without completing due diligence, then decide not to proceed.
- You fail to close without a contractual right to cancel. The seller may be entitled to the deposit as liquidated damages if the contract says so.
- You breach material terms of the contract, such as failing to deliver required documents or funds on time.
Good‑faith effort matters. Keeping thorough records of your loan application, inspection scheduling, and notices strengthens your position if a dispute arises.
Use earnest money strategically
You can use the deposit to signal strength without taking on unnecessary risk.
- Offer a larger deposit relative to competing offers when you are comfortable with the home and your financing.
- Deliver the deposit quickly after acceptance and show proof that funds are ready.
- Pair the deposit with seller‑friendly terms, such as a reasonable closing timeline, clean pre‑approval, and clear inspection scheduling.
Protect yourself while staying competitive:
- Keep essential contingencies until you are confident. The mortgage and inspection contingencies are usually the most important protections.
- Shorten time frames only if you can act fast. For example, schedule the inspection as soon as your offer is accepted.
- Put escrow instructions in writing. Name the escrow holder and account type, and outline how funds apply at closing.
- Consult a New York real estate attorney before waiving contingencies or offering an unusually large non‑refundable deposit.
Tradeoffs to consider:
- Larger deposit while keeping contingencies can strengthen your offer and still protect your money.
- Waiving contingencies plus a larger deposit creates a very strong offer, but increases the risk of losing the deposit if you back out or financing falls through.
Step‑by‑step timeline
Use this simple path to plan your earnest money from offer to closing:
- At offer submission: State the deposit amount and form of payment, such as wire or cashier’s check. Identify who will hold the funds and include your pre‑approval or proof of funds.
- After acceptance: Deliver the deposit within the time in your contract, often 24 to 72 hours. Get a written receipt.
- Attorney review: If included, this short window is usually two to three business days. Confirm any changes quickly.
- Inspection period: Book inspections immediately. Send any notices before the deadline.
- Mortgage commitment: Work with your lender to meet the financing date. Provide updated documents quickly.
- Title and closing prep: Clear any title issues and finalize insurance and closing disclosures.
- Closing: Your deposit is applied to your down payment and closing costs.
Refunds and disputes
If a contingency gives you the right to cancel, follow the contract’s notice rules. Send written notice to the seller and the escrow holder before the deadline. The escrow holder or attorney then releases funds per the contract.
If the seller disputes your refund, gather your documents, including receipts, wire confirmations, inspection reports, emails, and lender letters. Many disputes resolve through negotiation between attorneys. If needed, your contract may outline mediation, arbitration, or court as next steps.
Quick checklist
- Confirm deposit amount, timing, and escrow holder in writing.
- Track all contingency deadlines on your calendar.
- Schedule inspections and submit loan documents right away.
- Keep mortgage and inspection contingencies unless you fully accept the risk.
- Save all receipts and written notices.
- Ask your attorney to review terms before you waive protections.
Get local guidance
A smart earnest money plan can help you win the home you love in Garden City without taking on more risk than you intend. If you want help tailoring the right deposit amount and timeline to today’s Nassau County market, reach out. You will get clear guidance, a calm process, and a strategy that fits your budget and goals. Connect with Nicholas Santillo to start your Garden City home search with confidence.
FAQs
What is earnest money for Garden City buyers?
- It is a good‑faith deposit you submit with an accepted offer to show commitment, held in escrow and applied to your down payment and closing costs at closing.
How much earnest money is typical in Garden City?
- Many buyers offer about 1% to 3% of the price, while competitive Long Island deals often see 2% to 5% or more; lower‑priced homes sometimes use $5,000 to $20,000 flat amounts.
Who holds earnest money in New York transactions?
- The listing broker, a buyer’s or seller’s attorney, or a title or escrow company commonly holds funds in a separate trust or escrow account under state rules.
When does earnest money become non‑refundable in Garden City?
- Once you waive or miss contingency deadlines, or if you default without a contractual right to cancel, the seller may be entitled to keep the deposit per the contract.
Can I get my deposit back if financing falls through?
- If your contract includes a mortgage contingency and you act in good faith but cannot secure a loan by the deadline, you can usually cancel and receive a refund with timely written notice.
How fast do I need to deliver earnest money after acceptance?
- Many contracts require delivery within 24 to 72 hours. Follow your contract’s exact timeline and obtain a written receipt from the escrow holder.
