When a buyer makes an offer on your Florida home, they'll typically include an earnest money deposit — a check or wire transfer meant to show they're serious. As a seller, understanding how earnest money works can protect you if a deal falls apart and help you evaluate which offers carry real commitment.
This guide covers everything Florida sellers need to know about earnest money: how much to expect, who holds it, when buyers can get it back, and what happens if they back out without a valid reason.
What Is Earnest Money?
Earnest money is a deposit a buyer makes when submitting a purchase offer. It's not an extra payment on top of the purchase price — it's applied toward the buyer's closing costs or down payment at closing. Think of it as the buyer putting skin in the game.
In Florida, earnest money isn't legally required, but it's standard practice. A buyer who submits an offer with no earnest money deposit is sending a signal: they may not be fully committed. Most experienced sellers — and agents — expect to see a deposit alongside any serious offer.
💡 Earnest money does not go to the seller directly. It's held in escrow by a neutral third party — typically a title company, real estate attorney, or licensed brokerage — until closing or until the deal terminates.
How Much Earnest Money Should You Expect in Florida?
There's no fixed legal requirement in Florida, but the general rule of thumb is 1% to 3% of the purchase price. On a $400,000 home, that's $4,000 to $12,000. In competitive markets or on higher-priced properties, buyers sometimes offer more to strengthen their offer.
Here's a general breakdown by price range:
| Purchase Price | Typical Earnest Money (1–3%) | Strong Deposit (3–5%) |
|---|---|---|
| $200,000 | $2,000 – $6,000 | $6,000 – $10,000 |
| $350,000 | $3,500 – $10,500 | $10,500 – $17,500 |
| $500,000 | $5,000 – $15,000 | $15,000 – $25,000 |
| $750,000 | $7,500 – $22,500 | $22,500 – $37,500 |
| $1,000,000+ | $10,000 – $30,000 | $30,000 – $50,000+ |
A higher deposit signals buyer confidence and financial stability. When evaluating multiple offers, a larger earnest money deposit can be a meaningful differentiator — especially if the offers are otherwise similar in price.
Who Holds the Earnest Money in Florida?
Under Florida law, earnest money must be held in escrow by a licensed escrow agent. This is usually one of the following:
- A Florida-licensed title company
- A real estate attorney
- A licensed real estate brokerage
- A Florida-licensed bank or financial institution
The escrow agent is a neutral party — they don't work for the buyer or the seller. They hold the funds according to the terms of the purchase contract and release them only when both parties agree, or when a dispute is resolved.
The Florida Real Estate Commission (FREC) has strict rules about how escrow funds must be handled, including timely deposit requirements and dispute resolution procedures. Sellers should always confirm that the escrow agent is properly licensed.
When Does Earnest Money Get Deposited?
The standard Florida purchase contract (the Florida Bar form used in most residential transactions) specifies when the deposit must be made. Typically the buyer has 3 business days from the effective date of the contract to deliver the earnest money to the escrow agent.
As a seller, you should verify that the deposit was actually received within the timeframe specified in the contract. If the buyer misses the deposit deadline without a valid reason, that's a breach of contract — and you may have remedies available.
⚠️ Always ask for written confirmation from the escrow agent that the earnest money has been received. Don't assume the deposit was made just because the buyer said they sent it.
Earnest Money and Contingencies: When Buyers Can Get It Back
This is where it gets critical for sellers to understand. Buyers can typically get their earnest money back — in full — if they cancel the contract during a valid contingency period. The most common contingencies in Florida purchase contracts are:
Inspection Contingency
Florida's standard contract includes an inspection period — commonly 10 to 15 days. During this window, the buyer can have the home inspected and, if they're not satisfied, cancel the contract and receive a full refund of their earnest money. The buyer doesn't have to give a specific reason.
Financing Contingency
If the buyer's loan is denied, they can typically cancel and recover their deposit — provided they applied for the loan in good faith and within the timeframe specified. If a buyer simply gets cold feet and claims financing fell through, the situation gets more complicated.
Appraisal Contingency
If the home appraises below the purchase price and the buyer and seller can't reach an agreement, the buyer may be able to exit and get their deposit back depending on how the contract is written.
Title Contingency
If a title search reveals defects that can't be resolved — liens, boundary disputes, ownership issues — the buyer can typically cancel and receive a refund.
When Can a Seller Keep the Earnest Money?
If a buyer cancels the contract outside of a valid contingency — meaning all contingency periods have expired and they simply decide they don't want to buy — the seller may be entitled to keep the earnest money as liquidated damages.
This is covered in the standard Florida purchase contract under the Default section. When a buyer defaults without cause, the standard contract gives the seller two options:
- Accept the earnest money as liquidated damages — you keep the deposit and the deal is over.
- Sue for specific performance — you pursue the buyer in court to force them to complete the purchase. This is less common but available for high-value transactions where the damages are significant.
Most sellers choose the liquidated damages route — it's faster and doesn't require litigation.
📋 Important: Even if you believe you're entitled to the earnest money, the escrow agent cannot simply release it to you. Florida law requires either mutual written agreement from both parties, or a court order, before disputed escrow funds can be released.
Earnest Money Disputes in Florida
If a buyer cancels outside a contingency period but still demands their deposit back, you have a dispute on your hands. Here's how Florida handles it:
The escrow agent is required to notify FREC within 15 business days if they receive conflicting demands for the deposit. FREC then gives both parties 20 days to resolve the dispute through one of several methods: mediation, arbitration, interpleader (the escrow agent deposits the funds with the court), or a written agreement.
The resolution process can take time, so the best protection is a well-drafted contract with clear contingency deadlines and a higher earnest money deposit from the start.
How to Use Earnest Money to Evaluate Offers
As a seller, the earnest money amount tells you something about buyer intent. When reviewing competing offers, consider:
- Higher deposit = more commitment. A buyer putting down 3–5% is less likely to walk away over minor issues.
- Shorter contingency periods = faster path to certainty. A buyer offering a 7-day inspection period instead of 15 is moving faster.
- All-cash buyers often put up larger deposits. Without a financing contingency, the earnest money is your primary protection.
- Watch for unusually low deposits on high-priced offers. A buyer offering $500 earnest money on a $500,000 purchase is a red flag.
If you're selling your home without a traditional agent — using a flat fee MLS service like Peak Trust Realty — understanding these nuances yourself becomes even more important. You're the one reviewing offers and negotiating terms directly.
Earnest Money vs. Down Payment: What's the Difference?
These two terms are often confused. Here's the simple breakdown:
- Earnest money is deposited shortly after the contract is signed and held in escrow until closing. It's typically 1–3% of the purchase price.
- Down payment is the buyer's equity contribution at closing — the portion of the purchase price not covered by the mortgage. It's typically 3.5% to 20% or more.
At closing, the earnest money is credited toward the buyer's total funds due — it becomes part of the down payment or closing costs. The buyer doesn't pay both separately; the earnest money is counted as part of what they bring to the table.
Sell Your Florida Home for $118 — No Commission
Peak Trust Realty lists your home on the MLS, Zillow, Realtor.com, and hundreds of sites for a flat $118 fee. You keep the equity — and you handle negotiations directly with buyers.
Get Listed for $118 →Key Takeaways for Florida Sellers
- Earnest money in Florida is typically 1–3% of the purchase price and is held in escrow by a neutral third party.
- Buyers can get their deposit back if they cancel during a valid contingency period (inspection, financing, appraisal).
- If a buyer cancels outside of contingencies without cause, you may be entitled to keep the deposit as liquidated damages.
- Disputed deposits can't be released without mutual agreement or a court order — Florida law protects both parties.
- A higher earnest money deposit signals stronger buyer commitment, especially in competitive situations.
- Always confirm in writing that the deposit was received within the contract deadline.
Understanding earnest money isn't complicated, but the details matter. The more you know about how deposits work, the better equipped you are to evaluate offers, protect yourself if a deal falls through, and negotiate from a position of confidence.