Buying a home in Greater Portland comes with a big question: how much earnest money should you put down, and what happens to it? You want your offer to stand out without putting your cash at unnecessary risk. In this guide, you’ll learn how earnest money works in Maine, who holds it, typical deposit strategies in the Portland market, the contingencies that protect you, and what to expect if a deal unravels. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit that shows a seller you intend to close. In Maine, it is credited to your cash to close at settlement. There is no fixed statewide amount. Your purchase and sale agreement sets the rules for how much you deposit, who holds it, when it is refundable, and how it is released.
Who holds your deposit
In Greater Portland, your deposit is typically held in a trust or escrow account. The contract should name the holder and spell out release terms.
- Listing broker’s escrow account
- Buyer’s or seller’s attorney trust account (very common in Maine)
- Title or closing company escrow account
- Buyer’s broker escrow account in some cases
Ask for a written receipt for your check or wire and keep it with your records. Brokers and attorneys must follow trust-account rules, including separate accounts and detailed recordkeeping.
How much to offer in Portland
Deposit size depends on price point and competition. Your goal is to signal commitment without taking on more risk than you intend.
- Nominal flat amounts for lower-priced homes or slower conditions: commonly $1,000 to $5,000
- Percentage-based deposits in stronger or higher-priced deals: often 1 to 3 percent of the purchase price
- Larger deposits, sometimes 3 to 5 percent or more, in very competitive situations
Market conditions shift across Portland and surrounding Cumberland County towns. Downtown Portland condos may see different norms than suburban or rural properties. Tailor your deposit to the property and competition level.
The tradeoffs
- Larger deposits can strengthen your offer but increase your exposure if you waive protections or cannot close.
- Smaller deposits reduce risk but may weaken your position in multiple-offer scenarios.
Contingencies that protect you
Well-drafted contingencies help you keep your deposit if the property or financing does not meet expectations. Common protections include:
- Inspection contingency for home and systems. Add tests that fit the property, such as lead, radon, septic, or chimney.
- Financing contingency that requires a loan commitment by a set date.
- Appraisal contingency to address a valuation below the purchase price.
- Title and survey contingencies for defects or unacceptable easements.
- Septic and well contingencies for homes outside municipal services.
- Sale-of-home contingency if you must sell another property first, though it may reduce competitiveness.
Typical timeframes in Greater Portland are contract-driven:
- Inspections: often 5 to 14 calendar days; some competitive offers use 5 to 7 days
- Loan commitment: often 21 to 30 days
- Appraisal: typically tracks lender timelines, often 7 to 21 days
If you miss a deadline or waive a contingency, your deposit may be at risk. Put dates on your calendar and confirm all notices in writing.
When your money is not refundable
Your earnest money usually becomes non-refundable when:
- You waive a contingency in writing, such as the inspection contingency
- You fail to cancel within a contingency window
- You breach the contract without an applicable contingency, and the contract allows the seller to keep the deposit as liquidated damages
Your earnest money typically remains refundable if:
- You cancel under a valid contingency, on time and as the contract requires
- The seller materially breaches the contract
- Both parties agree in writing to release the funds
To avoid gray areas, define what “default” and “liquidated damages” mean in your agreement and state how funds will be released.
If a deal falls through
When a transaction does not close, one of three outcomes is common:
- Deposit returned to the buyer when a contingency is properly exercised or the seller defaults
- Seller keeps the deposit if the buyer is in breach and the contract allows forfeiture
- Deposit held in escrow if there is a dispute, pending a written agreement or a decision through mediation, arbitration, or the courts
Escrow agents follow the purchase and sale escrow instructions. If those instructions are unclear, funds often remain in escrow until there is a mutual release or a legal directive. Many Maine closings involve attorneys, and disputes are frequently resolved through negotiation among counsel.
Offer strategies for Portland buyers
You can adjust deposit size and timelines to match the property and your risk tolerance.
- Competitive offer: higher percentage deposit, a shorter inspection window of about 5 to 7 days, and strong proof of funds or preapproval. Keep essential protections in place unless you accept the added risk.
- Balanced offer: moderate deposit, such as 1 to 2 percent or a mid-range flat amount, inspection in 7 to 10 days, and a financing contingency with a clear commitment date.
- Conservative offer: smaller deposit, such as $1,000 to $5,000, and longer contingency windows. This can be safer but less competitive in multiple-offer situations.
For properties with private systems, include septic and well inspections. If your financing is not fully underwritten, keep the financing contingency until you have a firm loan commitment.
What to put in your contract
Your purchase and sale agreement should clearly state:
- The deposit amount and when and how it will be delivered
- The escrow holder and the specific trust or escrow account
- The contingencies you are using, with hard deadlines and definitions for satisfaction and waiver
- Appraisal language and your choices if the appraisal is short
- Septic and well inspections where applicable
- How disputes will be handled, such as mediation before litigation
Clear drafting reduces risk, speeds up escrow releases, and limits disagreements later.
Buyer checklist before you pay
Use this quick list before delivering earnest money:
- Attach a current preapproval or proof of funds to your offer
- Review the purchase and sale agreement with your broker and, when advisable, a Maine real estate attorney
- Confirm the escrow holder and ensure written escrow instructions are in the contract
- Calendar all contingency and financing dates
- Keep receipts for your check or wire and copies of all notices
Final thoughts
A thoughtful earnest-money strategy helps you write a stronger Portland offer without taking on unnecessary risk. The right amount, the right protections, and clear escrow instructions work together to keep your interests secure. If you want calm, contract-savvy guidance on structuring an offer in Greater Portland or along the Midcoast, connect with Adrianne Zahner. Let’s talk through your goals and build a plan that fits your risk comfort and the current market.
FAQs
What is earnest money in Maine real estate?
- It is a buyer’s good-faith deposit that shows intent to close and is typically credited to your cash to close at settlement, with refund rules defined by the contract.
Who usually holds earnest money in Portland, Maine?
- The listing broker, an attorney’s trust account, a title company, or sometimes the buyer’s broker. The contract should name the escrow agent and release terms.
How much earnest money should I offer in Greater Portland?
- Use a deposit that fits the price and competition: $1,000 to $5,000 for some lower-priced or slower deals, 1 to 3 percent for many competitive situations, and more in hot markets.
When can a seller keep my earnest money?
- If you waive contingencies, miss a deadline, or default without protection and the contract allows forfeiture as liquidated damages.
Are inspection, appraisal, and financing contingencies common in Maine?
- Yes. Buyers often use inspection, appraisal, and financing protections, plus title and, where relevant, septic or well inspections.
What happens if there is an earnest-money dispute?
- Funds may stay in escrow until there is a mutual release or a decision through mediation, arbitration, or court, based on the contract’s dispute process.
