Making an offer on a Durango home? Your earnest money can be the detail that wins the deal or puts your deposit at risk. If you are new to Colorado or buying your first home, it can feel confusing to figure out how much to offer and how it is protected. In this guide, you will learn what earnest money is, typical amounts in La Plata County, how escrow protects you, when it is refundable, and smart ways to strengthen your offer without taking unnecessary chances. Let’s dive in.
Earnest money basics in Colorado
Earnest money is your good-faith deposit that shows the seller you are serious. If the sale closes, it is credited toward your purchase price. If the contract ends under a valid contingency, it can be refunded.
In Colorado, the deposit is governed by the Contract to Buy and Sell Real Estate or another agreed form. The contract sets the amount, who holds the funds, when you must deliver them, and the contingencies and deadlines that protect your ability to recover the deposit.
Most deposits are held in a neutral escrow by a title company, an escrow company, or a brokerage trust account. These funds must be kept separate from operating funds and follow recordkeeping rules. You should receive written confirmation when your deposit is received.
Durango norms: how much to put down
There is no single “right” amount for every Durango property. Across Colorado, common patterns include a flat few thousand dollars for lower-priced or low-competition homes and about 1 to 2 percent of the price for mid-priced homes. In competitive situations or for higher-priced properties, buyers may offer 2 to 3 percent or more to stand out.
Durango’s small mountain market can see strong interest from out-of-area buyers, which makes some listings more competitive. Local expectations vary by price point and season, so it helps to tailor your deposit to the property and the competition level. First-time and out-of-state buyers often strengthen offers by pairing a solid deposit with tight but realistic timelines and strong proof of funds.
Where your deposit is held and protected
Title and escrow companies are common holders for earnest money in Colorado. Brokerage trust accounts are also used. In either case, the funds are kept in a segregated account with audit and recordkeeping requirements.
Ask for written confirmation of receipt that shows the amount, date, and who is holding the funds. Keep copies of your check image or wire receipt, plus any email confirmations and escrow instructions.
Watch for wire-fraud risks. Always verify wiring instructions by calling a known phone number for the title or escrow company, not one pulled from a suspicious email. Confirm instructions shortly before sending funds and keep records of your communications. If practical, consider a cashier’s check or in-person delivery.
When earnest money is refundable
Your contingencies are the key to protection. Common refundable situations include:
- Inspection contingency: You can cancel within the inspection period and receive a refund, or negotiate repairs or credits.
- Financing contingency: If you cannot obtain the agreed loan despite good-faith efforts within the deadline, the deposit is typically refundable.
- Appraisal contingency: If the appraisal comes in low and you choose not to cover the gap, you can usually cancel and receive a refund if you follow the timeline.
- Title issues: Unresolved title defects can allow you to cancel and recover funds.
To preserve refund rights, deliver written notices exactly as the contract requires and before the deadlines expire.
When you can lose your deposit
You can forfeit earnest money if you default outside of contingency protections. Examples include withdrawing without a valid contingency, missing deadlines, or failing to deliver the deposit on time. Some contracts include a liquidated damages clause that lets the seller keep the deposit as the sole remedy if the buyer defaults. Disputes about whether a buyer acted in good faith or met timelines can lead to mediation, arbitration, or court, so document your actions carefully.
Make your offer stronger without extra risk
You can enhance your offer in Durango without overexposing your deposit. Consider these levers:
- Provide strong proof of funds or a robust pre-approval. Certainty matters to sellers.
- Shorten contingency windows to reasonable, achievable timelines. Do not waive protections you truly need.
- Use staged deposits. An initial amount at acceptance with an additional deposit after a milestone (such as loan approval) balances competitiveness and liquidity.
- Avoid oversized deposits that would be financially painful to lose.
Illustrative approaches that fit many Durango offers:
- Safer: A few thousand dollars in earnest money, a 7 to 10 day inspection period, and a 21 to 30 day financing contingency. This protects you and allows room to address issues.
- Competitive: About 2 to 3 percent earnest money, a 5 day inspection, a 14 day financing window, and strong pre-approval. This signals seriousness with tighter timelines.
Step-by-step: handling your earnest money
- Confirm local norms with your Durango buyer’s agent for the specific price band and neighborhood.
- Align the amount with your risk tolerance and cash flow.
- Select a trusted title or escrow holder and verify deposit delivery steps.
- Calendar every contingency deadline on day one of the contract.
- Deliver the deposit on or before the contract deadline and get written confirmation.
- Use written notices for inspection, appraisal, financing, and title per the contract.
- If you need more time, request written extensions before deadlines.
Common mistakes to avoid
- Delivering the deposit late or without proof of receipt.
- Relying on verbal approvals instead of sending required written notices.
- Waiving inspection or financing protections without a clear backup plan.
- Wiring funds based on unverified email instructions.
Out-of-state buyers: extra safeguards
- Work with a local Durango agent and a reputable title company.
- Get a strong lender pre-approval and assemble proof of funds early.
- Keep contingency timelines realistic for remote coordination.
- Verify wiring instructions by phone and save all receipts.
- Ask your agent about recent earnest money norms for similar listings.
When you align the deposit amount with the property, the competition, and your budget, you improve your chances without taking on unnecessary risk. The right plan keeps your money protected while showing sellers you are committed and prepared.
Ready to craft a confident offer in Durango or anywhere in La Plata County? Reach out to Karen Overington for local guidance, offer strategy, and end-to-end support from contract to closing.
FAQs
How much earnest money is typical in Durango?
- Many Durango offers range from a few thousand dollars to a low percentage of the price, with higher percentages in competitive or higher-priced situations.
Who usually holds earnest money in Colorado?
- A neutral title or escrow company commonly holds the funds, though a brokerage trust account may be used; always get written confirmation of receipt.
Can I get my earnest money back after a tough inspection?
- Yes, if you cancel within the inspection contingency period and follow the contract’s notice rules and deadlines.
What happens if my loan falls through?
- If you have a valid financing contingency and pursued approval in good faith within the deadline, the deposit is generally refundable under that contingency.
Can a seller keep my earnest money if they accept another offer?
- Sellers usually keep earnest money only if the buyer defaults under the contract; if the seller breaches, you may have remedies under the contract’s dispute process.
How do I avoid wire-fraud on my deposit?
- Verify wiring instructions by calling a known number for the title company, confirm close to the time of sending, and keep all receipts and emails.
Are staged deposits common in Colorado contracts?
- Some buyers use an initial deposit at acceptance and a second deposit after a milestone like loan approval to show commitment while managing risk.
