How Much Earnest Money Is Typical in San Diego Offers?
TL;DR (Quick Take):
Most San Diego buyers put down 1-3% in earnest money
Competitive areas like La Jolla may see 5%+
Earnest money protects the seller and shows you’re serious
It’s refundable under contingencies, but not always
What is earnest money, and why does it matter in San Diego real estate?
Earnest money, sometimes called a good faith deposit, is the amount a buyer puts forward when submitting an offer on a home. In the San Diego market, it’s a critical part of the negotiation. This deposit signals to the seller that you’re serious and helps differentiate strong offers from weaker ones. The funds are held in escrow and eventually go toward your down payment or closing costs.
In the current San Diego real estate climate, especially in highly desirable zip codes like 92130 (Carmel Valley) or 92037 (La Jolla), sellers often expect a larger earnest money deposit. It acts like a safety net for them. If a buyer backs out without a valid reason, the seller may be entitled to keep that money as compensation.
The idea behind earnest money isn’t new. In fact, it has roots in ancient property law where offering a token of value signified true intent to buy. Fast forward to modern-day San Diego, and the principle still holds: putting down a significant deposit can demonstrate your credibility in the eyes of the seller and their agent.
How much do buyers usually put down as earnest money in San Diego?
In most typical transactions, buyers offer between 1% and 3% of the purchase price as earnest money. For a $900,000 home in North Park or Mira Mesa, that could range from $9,000 to $27,000.
However, we’ve seen competitive scenarios in Encinitas or Del Mar where buyers went in with 5% or more, especially when trying to stand out among multiple offers. That could mean over $40,000 on a high-end home.
One of my recent clients offered a $38,000 earnest deposit, nearly 5%, on a $760,000 home to beat out 15 other buyers. It worked.
Interestingly, some sellers have even countered offers specifically asking for more earnest money. In a fast-paced neighborhood like University Heights or South Park, it’s not unusual for listing agents to ask for a 3% deposit right off the bat.
Is earnest money always refundable?
Here’s where things get tricky.
Earnest money can be refundable if your offer includes contingencies (common ones include inspection, appraisal, and financing). For instance, if your home inspection reveals major foundation problems and you back out within the agreed time frame, you usually get your deposit back.
But if you miss a deadline, waive contingencies, or get cold feet without cause? That money might be gone.
A past client of mine backed out of a deal due to termite damage discovered after the contingency period. The seller refused to release the funds, citing breach of contract, and it escalated to arbitration.
Always consult your broker to understand the timelines and legal protections. This is where working with the best San Diego broker or best San Diego realtor truly matters. They can negotiate contract language that offers you reasonable flexibility while still staying competitive.
What are San Diego sellers expecting right now?
From our on-the-ground experience, sellers are getting savvier. Many listing agents advise their clients to favor offers with:
Higher earnest money (≥3%)
Shorter contingency periods
Pre-underwritten loans
Strong buyer letters
A seller in Hillcrest shared that they accepted a slightly lower offer because the buyer submitted a 4% earnest deposit and waived the appraisal contingency. In a market as fast paced as San Diego, these terms often matter more than the top dollar.
Additionally, some newer sellers misunderstand how earnest money works and believe it guarantees the deal. It doesn’t. That’s why educating both parties is crucial.
What’s the role of earnest money in escrow?
In San Diego, earnest money goes into an escrow account managed by a neutral third party, usually an escrow company. That money stays there until closing.
If the deal closes, the funds are applied toward your down payment or closing costs. If not, who gets the money depends on whether contingencies were met or violated.
A local escrow officer told us:
“We rarely see disputes if everyone understands the timelines. Problems come when buyers sign things they don’t fully understand.”
Also worth noting:
In California, escrow companies cannot release funds without signatures from both buyer and seller, even if one party believes they are entitled to the deposit.
That means disputes can result in long delays or even legal action.
Tips to protect your earnest money in San Diego
Here are some smart strategies for keeping your earnest deposit safe:
Understand all contingencies and deadlines
Avoid waiving key protections unless absolutely necessary
Work with a local agent who knows contract nuances
Communicate quickly if anything changes
Get everything in writing
Ask your lender about timeline expectations before writing your offer
Use tools like calendar reminders to track contingency windows
Read and re-read any counter offers or amendments that affect your deposit
And remember: Your best San Diego realtor should walk you through each scenario.
Real FAQs About Earnest Money in San Diego
What’s considered an aggressive earnest money deposit in San Diego?
In hot neighborhoods like Mission Hills or Pacific Beach, anything over 3% is viewed as aggressive.
It tells the seller, “I’m all in.”
Aggressive doesn’t always mean advisable. Discuss with your agent.
Can I get my earnest money back if inspection reveals issues?
Yes, as long as you’re within the inspection contingency window.
Ensure your contract includes this clause and you stick to the timeline.
Notify the seller in writing using an official cancellation or notice to perform.
What happens if the seller won’t release my earnest money?
In California, both parties must agree to release escrow funds.
If there’s a dispute, it can go to arbitration or small claims court.
Keep documentation of all communications (emails, texts, reports).
Final Take
The amount of earnest money you offer in San Diego isn’t just about numbers. It’s a powerful statement. It shows you’re serious, strategic, and ready to close. From downtown condos to beachside retreats, every offer benefits from thoughtful planning.
Need help writing a competitive offer that protects your wallet? We’ve helped hundreds of buyers do exactly that.
Let’s make your next offer your winning one.
Looking for expert guidance through San Diego’s competitive real estate market? We offer one-on-one strategy sessions and contract reviews to ensure you’re protected every step of the way. Don’t gamble with your deposit. Call or text our office today and put our local experience to work for you.
Contact Scott Cheng directly at (858) 405-0002 or scott@scottchengteam.com for personalized guidance on your next offer. Whether you’re a first-time buyer or a seasoned investor, we help you navigate earnest money, contingencies, and every detail in between.
