Earnest Money In Traverse City: What Buyers Should Know

You are about to wire thousands of dollars to secure a home in Traverse City, and you want to feel confident every step of the way. That good-faith deposit matters to your offer and to your peace of mind. In this guide, you’ll learn how earnest money works here in Grand Traverse County, what’s typical, how escrow is handled in Michigan, and the protections that keep your funds safe. Let’s dive in.

What earnest money is

Earnest money is a good-faith deposit you include with your offer to show the seller you’re serious. It is not a fee. If you close, the deposit is credited toward your cash to close, such as your down payment and closing costs.

The deposit also gives you time to complete due diligence with agreed protections. If you cancel within a valid contingency, the money is typically returned per the contract’s release terms. If you default after contingencies expire, the seller may have a right to the funds as outlined in the agreement.

Typical amounts in Traverse City

Across many U.S. markets, a common range is about 1–3 percent of the purchase price. In competitive or multiple-offer situations, some buyers offer 3–5 percent to strengthen their position.

Use simple math to set expectations:

• On a $300,000 home, 1 percent is $3,000 and 2 percent is $6,000.
• On a $500,000 home, 1 percent is $5,000 and 2 percent is $10,000.

Traverse City attracts both primary and second-home buyers, including remote buyers. That demand can push competition, so sellers may expect stronger deposits and tighter timelines. Your final number should fit your comfort with risk, your contingency terms, and your overall offer strategy.

Who holds the deposit in Michigan

In Michigan, earnest money is typically held by a neutral escrow holder. That may be a local title company, a closing attorney, or a broker’s trust account. The purchase agreement will name the escrow agent and state the amount, delivery deadline, and release conditions.

You should receive an escrow receipt or deposit confirmation after you deliver funds. Keep that documentation with your other transaction records.

When you deliver your funds

Most contracts require delivery shortly after acceptance, commonly within 24–72 hours, or as otherwise stated in the agreement. Follow the contract timeline exactly and get a written receipt.

If you need more time due to travel or bank logistics, negotiate that detail into the offer. The more clearly you outline delivery in writing, the fewer surprises you’ll face later.

Contingencies that protect your money

Your contingency language determines when your deposit is refundable. Common protections include:

• Home inspection. You can inspect the property and cancel or negotiate within the inspection window.
• Financing. If your loan is denied despite a good-faith effort within the financing period, you can typically cancel.
• Appraisal. If the home does not appraise at or above the purchase price and you do not waive this protection, you may cancel per the contract.
• Title review. If title issues arise that cannot be cured in time, you may be able to cancel.
• Sale of your current home. If you need to sell a home first, include a clear contingency and timeline.

If a contingency expires and you proceed without a written extension or waiver, you might lose that protection. If you default after protections have lapsed, the seller may be entitled to keep your deposit as specified in the contract. If a seller defaults, you may be entitled to a full refund.

Refunds and dispute procedures

Purchase agreements usually include a process for releasing funds. In many cases, the escrow holder requires a mutual release signed by both parties, or a court or arbitration order, before they release the money.

If a disagreement arises, check your contract for mediation or arbitration steps. Keep all correspondence and receipts. Clear communication and documentation help resolve issues faster.

Tips for remote and second-home buyers

If you are buying from out of the area, plan your logistics early. A few best practices can protect your deposit and your timeline:

• Use a licensed title company or trusted escrow agent. Get written escrow instructions and an official receipt.
• Beware of wire-fraud scams. Always verify wiring instructions by calling the escrow company or title office using a trusted phone number, not the one in an email that could be spoofed. Confirm account details before you send any funds.
• Use traceable payment methods. Bank wires to verified escrow accounts or cashier’s checks are common. Never send funds to a private individual or an unfamiliar account.
• Add practical contingencies. If you cannot be there in person, consider a clause for a final walk-through or delayed occupancy.

For seasonal and waterfront properties common in Northern Michigan, include targeted inspections. Ask about winterization, septic and heating systems, shoreline structures, floodplain considerations, and any riparian rights that affect use and access.

Balancing deposit size and risk

A larger deposit can make your offer stand out, especially when sellers are comparing terms from local and remote buyers. It signals confidence and capacity to close. It also increases your exposure if you breach the contract after protections expire.

You can balance strength and safety by pairing a competitive deposit with clear contingency language. You might include cure periods after inspections, realistic appraisal and financing timelines, and explicit refund instructions for common scenarios.

Your earnest-money timeline

Map your steps so you do not miss a deadline:

1. Offer accepted. Deposit delivery usually due within 24–72 hours per the contract.
2. Inspection window. Schedule and complete inspections; submit any repair requests or cancellation within the stated period.
3. Appraisal and financing. Your lender orders the appraisal; monitor your financing commitment deadline.
4. Title review. Confirm any title objections or required fixes are addressed on time.
5. Clear to close. At closing, your deposit is credited to your down payment and/or closing costs.

What to confirm before depositing

Use this quick checklist before you send funds:

• Get pre-approval, not just prequalification, to support a confident offer.
• Confirm the exact deposit amount, escrow holder, and delivery deadline in the purchase agreement.
• Request written escrow instructions and account details; verify by phone with the title or escrow company.
• Use a traceable payment method and get a deposit receipt.
• Put all contingency deadlines on your calendar. Ask for extensions in writing if needed.
• For remote or second-home purchases, clarify occupancy timing, key handoff, and utility transfers in the contract.
• In FSBO deals, insist on a professional escrow holder and a written escrow agreement.

Local nuances to keep in mind

Traverse City’s mix of primary residences and vacation homes can create bursts of competition. Second-home activity and remote buyers may push sellers to favor larger deposits and shorter contingency windows. Waterfront and seasonal homes often need specialized inspections that take coordination, especially in winter or when systems are shut down.

Because norms vary by property type and neighborhood, work with a local agent who can tailor the deposit amount and timing to your goals, the home’s condition, and the market pulse.

Work with a trusted local team

You deserve clear guidance, careful escrow handling, and a strategy that fits your risk tolerance. We help you right-size your deposit, structure protections that make sense, and keep every deadline on track so you feel confident from offer to close.

Questions about earnest money or your offer strategy in Traverse City? Schedule a Free Consultation with The Crane Group. We’ll walk you through the options, coordinate inspections and escrow, and help you compete with clarity and calm.

FAQs

What is earnest money in a home purchase?

• It is a good-faith deposit you submit with your offer that is applied to your down payment and/or closing costs at closing.

How much earnest money is typical in Traverse City?

• Many buyers offer about 1–3 percent of the price; in competitive situations, 3–5 percent is sometimes used to strengthen an offer.

Who holds the earnest money in Michigan?

• A neutral escrow holder such as a title company, closing attorney, or a broker’s trust account, as specified in your purchase agreement.

When do I pay the deposit after my offer is accepted?

• Delivery is usually due shortly after acceptance, commonly within 24–72 hours, or by the exact timeline in your contract.

When can my earnest money be refunded?

• If you cancel within a valid contingency period and follow the contract’s notice and release steps, your deposit is typically refundable.

What happens to the deposit at closing?

• The escrowed amount is credited toward your cash to close, such as your down payment and allowable closing costs.

What if there is a dispute over releasing the funds?

• Escrow agents usually require a mutual release signed by both parties or a court or arbitration order to disburse disputed funds.