Buying near MSU or across East Lansing and hearing a lot about earnest money? You are not alone. The deposit can feel confusing when you are focused on tours, inspections, and loan pre-approval. This guide breaks down what earnest money is, how much you might offer in East Lansing, how it is protected, when it is refundable, and the steps to keep your deposit safe. Let’s dive in.

Earnest money basics

Earnest money is a deposit you include with an offer to show a seller you are serious. It creates an initial stake in the contract and reduces the chance that a buyer walks away without cause.

It is not your down payment. If you close, your earnest money is credited toward your purchase price or closing costs. If you do not close, what happens to your deposit depends on your contract.

Typical amounts in East Lansing

How deposits are structured

• Flat dollar amount, such as $1,000 or $5,000.
• Percentage of the price, commonly 1% to 3% in many markets.
• Larger amounts when you want to signal a stronger offer in a competitive situation.

Local ranges and examples

• Low competition: $500 to $2,500, often on lower-priced homes or slower listings.
• Typical competition: about 1% to 2% of the price is a common middle ground.
• Very competitive or MSU-adjacent listings: 2% to 4% or higher in bidding wars.

Examples:

• $150,000 home: 1% is $1,500; 2% is $3,000.
• $300,000 home: 1% is $3,000; 2% is $6,000.
• $450,000 home: 1% is $4,500; 2% is $9,000.

Your ideal amount depends on price, competition, and your comfort with risk. Talk with your agent about the specific property and strategy.

How your deposit is held and protected

The purchase agreement should name who holds your deposit. A neutral title or escrow company is the most common and recommended choice. Some deals name a brokerage or an attorney, but funds should always be placed in a trust or escrow account.

Contracts usually require delivery of earnest money within a set window after acceptance, often within 24 to 72 hours. You should receive written confirmation when the money is deposited.

The escrow holder keeps the funds in a separate account. At closing, your earnest money shows as a credit on the final statement. Protections include a written receipt, clear refund rules in the contract, and dispute procedures on standard Michigan forms if there is a disagreement.

When you can get it back

Earnest money is usually refundable if you cancel within your contract’s contingency periods and follow the notice rules. Common refundable scenarios include:

• Inspection contingency: you cancel within the inspection window based on findings.
• Financing contingency: you cannot obtain financing and terminate per the contract.
• Appraisal contingency: the appraisal comes in low and you cancel as allowed.
• Title issues: the seller cannot deliver clear title as required.
• Seller misses agreed deadlines or required actions.

Deadlines and written notice are critical. Missing a date or relying on informal messages can put your deposit at risk.

When it is at risk

You can lose your earnest money if you default without an active contingency or after you remove contingencies. Some contracts include a liquidated damages clause that lets the seller keep the deposit if the buyer breaches.

If a dispute arises, escrow holders typically need joint written instructions or a court order to release funds. Many escrow agreements allow the holder to deposit the funds with the court if the parties cannot agree. Keep records and follow your contract’s notice steps.

A simple East Lansing timeline

• Day 0: Offer accepted. Contract sets your earnest money deadline, often 24 to 72 hours.
• Day 1 to 3: You deposit funds with the named title or escrow company and get a receipt.
• Day 1 to 10: Inspection period, commonly 7 to 10 days. Shorter windows can strengthen offers.
• Day 7 to 21: Financing contingency period, often 21 to 30 days for mortgage commitment.
• Day 10 to 30: Appraisal ordered and completed within the lender timeline.
• Closing: Often 30 to 45 days from acceptance, depending on lender, title, and logistics.

In hot spots near campus, sellers may expect shorter inspection windows and faster closings. Balance speed with protection.

Smart protection tips

• Work with a local agent who knows MSU-adjacent demand and deposit norms.
• Name a neutral title or escrow company in your offer and require a written receipt.
• Set clear contingencies with dates for inspection, financing, appraisal, and title.
• Put all notices and cancellations in writing per your contract instructions.
• Confirm where the deposit will be held and by whom, in a trust or escrow account.
• Avoid verbal cancellations. Follow your contract’s termination steps exactly.
• If you need co-signers or nontraditional documents, allow more time for financing.

Special notes near MSU

Some East Lansing properties near campus see higher demand from both homebuyers and investors. That can influence earnest money expectations and timelines.

• Investment or rental listings may attract multiple offers and call for stronger deposits.
• If you are targeting a specific move-in date tied to a semester or lease, build in realistic contingency periods.
• Condos can add association document reviews that affect timing. Plan for that window in your offer.

Quick checklist before you submit an offer

• Choose your deposit amount based on price and competition.
• Name a neutral title or escrow company to hold funds.
• Set inspection, financing, appraisal, and title deadlines in writing.
• Confirm how and when you will deliver the deposit.
• Line up your lender and documents for a smooth financing timeline.
• Review any condo or association timelines if applicable.
• Agree on how disputes will be handled if they arise.

Ready to move forward?

You deserve a plan that balances strength and protection. Our local team helps you right-size your earnest money, set smart contingency timelines, and coordinate lenders, inspectors, and title so you can move with confidence. If you are buying in East Lansing, connect with Christopher Silker to get a clear offer strategy and a smooth path to closing.

FAQs

What is earnest money in East Lansing real estate?

• It is a buyer’s deposit submitted with an offer to show commitment and is credited to you at closing if the sale completes.

How much earnest money for a $300,000 East Lansing home?

• A common range is 1% to 2% of price, which equals $3,000 to $6,000 in typical competition.

Who holds earnest money in Michigan transactions?

• A neutral title or escrow company commonly holds it in a trust account; some deals name a brokerage or attorney.

When is earnest money refundable if my financing falls through?

• It is refundable only if your contract includes a financing contingency and you cancel within the stated deadline using proper written notice.

What happens if the appraisal is lower than my offer price?

• If you have an appraisal contingency, you can renegotiate or cancel within the deadline and receive your deposit back.

How fast must I deposit earnest money after acceptance in East Lansing?

• Many contracts require delivery within 24 to 72 hours of mutual acceptance; check your agreement for the exact deadline.

Can a seller keep my earnest money if I back out without a contingency?

• Yes, if you default after removing contingencies or miss deadlines, the seller may keep the deposit per the contract.

How is earnest money applied at closing?

• It appears as a credit on your closing statement and reduces the cash you need to bring to the closing table.