Buying in DeForest and keep hearing about earnest money? You are not alone. This small deposit can make or break your offer, and it plays a big role in what happens if a deal falls apart. When you understand how it works in Wisconsin, you can write a stronger offer and protect your money.
In this guide, you will learn what earnest money is, how much to offer in Dane County, who holds it, when it is refundable, and what to expect if there is a dispute. We will use Wisconsin practices and forms so you can move forward with confidence. Let’s dive in.
Earnest money basics
Earnest money is a good‑faith deposit you pay after your offer is accepted to show you intend to complete the purchase. In most cases it applies to your cash to close at settlement. If the sale does not close, the contract controls what happens to the deposit.
Typical amounts range from about 1,000 to 5,000 dollars or roughly 1 to 3 percent of the purchase price. In a competitive DeForest market, buyers sometimes offer more to stand out. The right number depends on the price point, your comfort level, and current local demand.
How it works in Wisconsin
Most residential offers in Wisconsin use Wisconsin REALTORS Association forms, such as the WB‑11 Residential Offer to Purchase. These forms contain a specific earnest‑money section where you name the escrow holder, the deposit amount, and the deadline to deliver funds.
The funds are usually held in an escrow or trust account by a title company, an attorney, or a licensed real estate brokerage. Wisconsin brokers must follow state trust‑account rules and keep detailed records. Always get a written receipt when you deposit funds.
Your offer will state when the deposit is due. Common wording is within a set number of business days after acceptance. There is no automatic statewide default. Follow the exact timing in your contract.
Refunds, contingencies, and defaults
Earnest money is typically refundable if you cancel within a valid contingency period that is in your contract. Common contingencies include inspection, financing, appraisal, and title.
If you satisfy or waive contingencies and then default, the seller may be entitled to the earnest money or other remedies. Many Wisconsin offers include an optional liquidated‑damages clause. If that box is selected and you default, the seller may keep the earnest money as full settlement. If it is not selected, other remedies may apply under the contract.
If there is a disagreement about who should get the money, the escrow holder will follow the contract’s dispute instructions. If there is no clear instruction, the holder may keep the funds until you and the seller agree, submit the funds to a court, or follow a mediation or arbitration clause if the contract includes one.
Real‑world examples in DeForest
- Inspection issue and timely cancellation: You have a 10‑day inspection contingency. The inspector finds major foundation concerns, and you cancel in writing within the 10‑day window. Your earnest money is usually refunded per the contract.
- Financing falls through: Your financing contingency is active, but your lender cannot approve the loan by the deadline. You properly invoke the contingency. The earnest money is typically refunded.
- Default after removing contingencies: You remove all contingencies, then decide not to close. If your contract elected liquidated damages, the seller may keep the earnest money. If not, the seller may pursue other remedies defined in the contract.
Buyer checklist for DeForest
- Decide on an amount that fits the local market. In Dane County, 1,000 to 5,000 dollars or 1 to 3 percent is common. Go higher only if it strengthens your offer and fits your budget.
- Name the escrow holder in your offer. This can be the title company, your attorney, or a brokerage trust account.
- Set a clear deposit deadline and meet it. Deliver certified funds or a wire per instructions, and keep your receipt.
- Include clear contingency language for inspection, financing, appraisal, and title. Know exactly when each one expires.
- Track deadlines closely. Do not remove contingencies until you are ready.
- Ask your lender and inspector for timing guidance before you shorten deadlines or increase your deposit.
Seller checklist for DeForest
- Require earnest money. The amount should reflect price point and competition.
- Confirm deposit delivery by the deadline and get written proof.
- Consider electing the liquidated‑damages option if you want the ability to keep the deposit upon buyer default. Make sure the clause is completed correctly.
- Monitor contingency timelines and request written removals or terminations on time.
- Before claiming the deposit for default, review the contract details and consider legal guidance to avoid disputes.
How much to offer in Dane County
There is no one‑size‑fits‑all number. For many DeForest homes, buyers use a flat amount between 1,000 and 5,000 dollars or about 1 to 3 percent of the price. Adjust based on:
- Competition: Multiple offers often justify a larger deposit.
- Price point: Higher prices can push deposits toward a percentage.
- Confidence in financing: Strong preapproval and stable appraisal reduce risk.
- Timeline: Tight inspection or financing windows may support a smaller deposit, while extended timelines can favor a larger one.
Avoid common mistakes
- Missing the deposit deadline. Late delivery can be a breach.
- Skimming the contingency dates. Expired contingencies can limit refund rights.
- Waiving contingencies too soon. This increases the risk of losing your deposit if issues arise later.
- Not naming an escrow holder. Your offer should state exactly who will hold the funds.
- Lacking documentation. Always get and keep a receipt for your records.
If there is a dispute
If you and the other party cannot agree on who gets the funds, the escrow agent will follow the contract. They may hold the money until there is an agreement, submit the money to a court, or follow a contract clause that calls for mediation or arbitration. Because outcomes depend on specific contract language, get advice from your agent and consider consulting a Wisconsin real estate attorney if needed.
Your next step
Earnest money is a small detail with big impact. With the right amount, clear timelines, and well‑written contingencies, you can strengthen your offer and protect your deposit.
If you are planning a move in DeForest or anywhere in Dane County, we are here to guide you through each step and manage the details with care. Connect with Lessing Real Estate for local insights, contract guidance, and a smooth path to closing.
FAQs
What is earnest money in a Wisconsin home purchase?
- It is a good‑faith deposit that shows you intend to complete the purchase, usually credited to your cash to close at settlement.
How much earnest money should I offer in DeForest?
- Many buyers offer 1,000 to 5,000 dollars or about 1 to 3 percent of the price, adjusted for competition, price point, and comfort level.
Who holds my earnest money in Dane County?
- A named escrow holder such as a title company, attorney, or licensed brokerage trust account, as specified in your offer.
When is earnest money refundable under Wisconsin contracts?
- It is typically refundable if you cancel within a valid contingency period, such as inspection or financing, as defined in your contract.
What if the buyer fails to deposit earnest money on time?
- The seller may treat this as a breach and pursue remedies under the contract, which can include cancellation or damages.
Can the seller keep my earnest money if I back out?
- Possibly, especially if you waived contingencies and your contract elected liquidated damages. Contract terms control the outcome.
How long do I have to deposit earnest money in Wisconsin?
- The timeline is set in your offer, often within a stated number of business days after acceptance. Confirm the exact deadline in your contract.
