You just got an offer accepted in Lansing and now someone is asking for an earnest money deposit. How much should you put down, who holds it, and what protects you if things change? It is a big moment, and you want to get it right without taking on unnecessary risk. In this guide, you will learn how earnest money works in Michigan, what is typical around Ingham County, and how to safeguard your deposit from contract to closing. Let’s dive in.
Earnest money basics
Earnest money, sometimes called an EMD or good‑faith deposit, is money you put down after your offer is accepted to show you are serious about buying. It is not an extra fee. If you close, the deposit is credited toward your purchase price and closing costs.
The deposit gives the seller confidence and helps manage risk while both sides work through inspections, appraisal, financing, and title work. Your purchase agreement explains exactly how the deposit is handled from start to finish.
Who holds your deposit in Michigan
In Michigan, earnest money is held in a neutral escrow account until closing. Depending on the agreement and local practice, it can be held by:
- A real estate brokerage trust or escrow account.
- A title company or closing agent.
- An attorney’s trust account.
Your contract should state where the funds will be held and how they can be released. You should receive a written receipt when the deposit is delivered and deposited. At closing, the escrow holder credits the deposit to your costs or purchase price.
How much is typical in Lansing
There is no fixed statewide amount. The size of your deposit is negotiated in the offer and shaped by local custom. National guidance often puts deposits in the range of several hundred to a few thousand dollars, or about 1 to 3 percent of the purchase price in more competitive markets. In slower markets, deposits are often on the lower end of that range.
In Greater Lansing and Ingham County, the right amount depends on price point, the neighborhood’s competition level, your financing, and the seller’s expectations. The best approach is to confirm current norms with Nicole Giguere.
What influences your deposit amount
- Price tier: Higher‑priced homes often see larger deposits in dollars.
- Market temperature: In multiple‑offer situations, a larger deposit can help you stand out.
- Financing type: Cash buyers may offer a larger deposit or provide strong proof of funds.
- Seller guidance: Listing agents often advise sellers on deposit strength and risk.
Contingencies that protect your money
Contingencies are conditions in the contract that give you time to verify key items. If you cancel properly within a contingency window, your deposit is typically refundable as the agreement allows. Common protections include:
- Inspection contingency - Lets you inspect and negotiate repairs or cancel within a set period.
- Financing contingency - Protects you while pursuing final loan approval.
- Appraisal contingency - Covers a shortfall if the appraisal comes in below the price and you will not bridge the gap.
- Title contingency - Allows you to review the title commitment and address serious defects.
- Sale‑of‑home contingency - Ties your purchase to the sale of your current home, used less often in competitive settings.
- Property‑specific items - For rural or edge‑of‑county properties, you may include well, septic, or environmental checks, and for older homes, required disclosures.
Timing and deadlines matter
Contracts set specific timelines for each contingency. If you need to cancel, you must do so in writing and within the deadline set by the agreement. Once a contingency window expires, it becomes harder to recover the deposit unless other contract provisions apply. Track your dates closely and keep all notices in writing.
When you get it back or lose it
If you cancel properly under a contingency, the standard outcome is a full return of your deposit per the purchase agreement. If you breach the contract after contingencies have expired, the seller may be allowed to keep the deposit as liquidated damages or pursue other remedies, depending on the agreement.
How deposit disputes are resolved
Escrow holders follow the disbursement rules in the contract. If buyer and seller disagree, the funds are usually held until both parties sign a mutual release, or until mediation, arbitration, or a court order resolves the issue. In a contested situation, work closely with your agent and consider consulting a real estate attorney.
Step‑by‑step checklist for Greater Lansing buyers
Before you make an offer
- Get a lender pre-approval to strengthen your offer and inform your financing timeline.
- Discuss current Greater Lansing deposit norms with Nicole Giguere by price range and neighborhood.
- Decide on a deposit amount that signals commitment while keeping your risk in check.
- Confirm how you will deliver funds, such as a wire or cashier’s check.
When drafting the offer
- Specify where the deposit will be held, including contact details for the escrow holder.
- Set clear timelines for inspection, financing, and appraisal that you can meet.
- Include instructions for how and when the deposit must be delivered after acceptance.
- Align the deposit amount with the home’s price tier and the market’s competitiveness.
After acceptance
- Deliver the deposit on time and obtain a written receipt.
- Calendar every contingency deadline and notice requirement in writing.
- Coordinate with the title or closing company to confirm the deposit will be credited at closing.
- If you need more time, seek a written amendment before a deadline expires.
If you are worried about losing your deposit
- Keep key contingencies in place until you are satisfied with inspections and financing.
- Request deadline extensions in writing when both sides agree.
- If you remove contingencies to compete, consider other seller assurances to balance risk.
Tips for a strong, safe offer
- Right‑size deposit - Use a number that matches market expectations without overcommitting.
- Keep timelines realistic - Shorter windows can look strong but increase your risk if you cannot perform.
- Show financial strength - Provide a clear pre-approval and respond quickly to lender requests.
- Communicate early - Use written notices and keep your agent looped in on any concerns.
- For cash, provide recent proof of funds and follow the contract’s deposit instructions.
New construction and land in Ingham County
Builder and land purchase agreements often handle earnest money a bit differently than resale contracts. Deposits can be staged or tied to construction milestones, and deadlines may be unique to the builder’s process. Rural parcels can also involve well and septic evaluations or other property‑specific checks.
If you are building or buying a lot, review the builder or land contract closely and line up your inspections and financing to match their timelines. A construction‑literate agent can help you understand deposit terms, milestone schedules, and how to protect your funds through the build.
Final thoughts
Earnest money is a normal part of buying a home in Lansing and across Ingham County. Choose an amount that fits the property and the moment, put clear protections in place, and track your deadlines. With the right plan, your deposit will do what it is meant to do, then roll into your closing costs when you get the keys.
Ready to set a smart deposit strategy for your next offer or new build? Let’s map it out together. Connect with Nicole Giguere for clear guidance rooted in Greater Lansing market experience. Let me lead you home.
FAQs
What is earnest money in Michigan home buying?
- It is a good‑faith deposit you pay after your offer is accepted that shows commitment and is credited to your price or closing costs if you complete the purchase.
Who holds my earnest money in Lansing?
- Depending on the contract, it is typically held in a broker escrow account, a title company, or an attorney trust account until closing or proper release.
How much should I offer for an earnest money deposit?
- Many buyers use several hundred to a few thousand dollars, or about 1 to 3 percent in more competitive situations, but you should confirm current Lansing norms with your agent.
What happens if I cancel during the inspection period?
- If you cancel in writing within the inspection window and follow the contract terms, your deposit is typically refundable under the agreement.
Can the seller keep my deposit if I back out late?
- If you breach after contingency deadlines expire, the seller may keep the deposit as liquidated damages or seek other remedies as allowed by the contract.
How are earnest money disputes resolved in Michigan?
- The escrow holder usually keeps the funds until both parties sign a mutual release or a mediation, arbitration, or court order directs disbursement.
