Buying in Wellesley moves fast, and great homes attract multiple offers. Price matters, but your earnest money deposit often signals how serious and prepared you are. If you want to compete with confidence, you need a simple, local playbook for how deposits work in Massachusetts and what’s expected in Wellesley. This guide breaks down amounts, timing, protections, and practical steps so you can write a stronger offer with less stress. Let’s dive in.
What earnest money is
Earnest money is your good‑faith deposit that shows a seller you intend to complete the purchase. In Massachusetts, it is part of your Purchase and Sale Agreement and is credited to you at closing. The agreement sets the rules for how the deposit is held, when it can be returned, and what happens if either party defaults.
Sellers look at deposit size alongside price, contingencies, and timing. In competitive towns like Wellesley, a clear, well‑funded deposit can help your offer stand out.
Typical amounts in Wellesley
There is no fixed number, but common guidance for many markets is 1% to 3% of the purchase price. In hotter situations, buyers may offer 2% to 5% or more to strengthen an offer. Because Wellesley prices are higher than average, deposits are larger in absolute dollars.
For quick context:
- $1,000,000 purchase: 1% is $10,000; 2% is $20,000.
- $2,000,000 purchase: 1% is $20,000; 2% is $40,000.
- $3,000,000 purchase: 1% is $30,000; 2% is $60,000.
Small flat deposits can be less persuasive at higher price points. You and your agent should calibrate deposit size to match the home’s price, the offer’s strength, and the level of competition.
What sets the right number
- Competition: Multiple‑offer situations often push deposits higher.
- Price band: Luxury listings expect larger absolute deposits.
- Offer terms: Faster closings or fewer contingencies can sometimes support a smaller deposit; a stronger deposit can offset other weaker terms.
- Buyer profile: Cash buyers may still use a robust deposit to show commitment.
Timing and escrow basics
Your Purchase and Sale Agreement will set the deposit deadlines. In many Massachusetts deals, the deposit accompanies the offer or is delivered within 24 to 72 hours after acceptance. If the deposit is not delivered on time, the seller may treat the offer as non‑compliant.
Funds are typically held in a dedicated escrow or trust account. In Massachusetts, the deposit holder is often the listing broker or the buyer’s attorney. The agreement should state who holds the money and confirm that the funds will be credited to you at closing.
Delivering funds safely
- Confirm instructions directly. Wire‑fraud scams target real estate transactions. Verify wiring instructions by calling known phone numbers for your agent or attorney before sending funds.
- Use secure methods. Certified checks or verified escrow instructions are common. Always get written confirmation of receipt and where funds are held.
Refundable vs. forfeited
Your deposit is usually refundable if you terminate under a valid contingency within the agreed timeline and with proper written notice. Common contingencies include inspection, financing, and clear title. If the seller cannot deliver clear title or defaults, you can typically recover your deposit.
Your deposit can be at risk if you fail to close without an allowed contingency, miss a contingency deadline, or withdraw for reasons not covered by your agreement. Some Massachusetts agreements include a liquidated‑damages clause. If you default and that clause applies, the seller may be entitled to keep the deposit as the sole remedy, subject to the contract.
Manage deadlines and notices
- Track every date. Many disputes stem from missed deadlines.
- Use written notice. Follow the contract’s exact instructions for delivering and documenting notices.
Disputes and releases
If the parties do not agree on releasing the deposit, the escrow holder will usually keep the funds in the trust account until there is a mutual written release or a legal resolution. Attorneys often negotiate solutions; court action or interpleader is a last resort and can take time. Your contract may also allow mediation or arbitration.
Buyer next steps
- Plan your deposit strategy. Match deposit size to price, competition, and overall terms.
- Line up funds. Have proof of funds or lender pre‑approval ready to show you can cover the deposit and close.
- Choose your escrow holder. Decide whether your attorney or the listing broker will hold funds and include that detail in the offer.
- Protect yourself. Include clear contingencies and understand each deadline. Confirm deposit delivery in writing and verify any wiring by phone.
Quick checklist
- Pre‑approval or proof of funds: ready to share
- Deposit source: liquid and available
- Deposit holder: named in the agreement
- Delivery method: check or verified wire; confirmation received in writing
- Contingency deadlines: calendared with reminders
- Notices: templates ready and process understood
Buying in Wellesley rewards preparation. When you know how deposits work, you can tailor your offer to the moment, protect your interests, and present as a confident, credible buyer. If you want a local, strategic partner to shape your deposit strategy and competitive offer, reach out to Molly Campbell Palmer.
FAQs
What is earnest money in a Massachusetts home purchase?
- It is a good‑faith deposit written into your Purchase and Sale Agreement and credited to you at closing under the agreement’s terms.
How much earnest money is typical in Wellesley?
- Many buyers use 1% to 3% in routine conditions and 2% to 5% or more in competitive situations, scaled to price.
When do I have to deliver the deposit in Wellesley?
- Often with the offer or within 24 to 72 hours after acceptance; your Purchase and Sale Agreement sets the exact deadline.
Who holds my deposit in Massachusetts?
- Commonly the listing broker’s trust account or your attorney’s escrow account, as specified in the agreement.
Can I get my deposit back after a tough inspection?
- Yes, if you have an inspection contingency and you give proper written notice within the contingency period.
What puts my deposit at risk?
- Missing contingency deadlines, failing to close without an allowed contingency, or withdrawing for reasons not covered by your agreement.
What happens if there is a dispute over the deposit?
- The escrow holder typically keeps funds in trust until there is a mutual release, mediation/arbitration outcome, or a court order.
