What Las Vegas Sellers Should Know About Earnest Money Deposits

by Ryan Rose

When a buyer makes an offer on your Las Vegas home, they typically include an earnest money deposit. This deposit demonstrates their serious intent to purchase. Understanding how earnest money works, when you can keep it, and when it gets returned helps you evaluate offers and protect your interests throughout the transaction.

What Is Earnest Money?

Earnest money is a good faith deposit the buyer makes when submitting an offer. It shows they are serious about purchasing and have financial skin in the game. The deposit is held in escrow until closing, when it becomes part of the buyer's down payment or closing costs.

Purchase Price	Typical Earnest Money
$300,000	$3,000-6,000 (1-2%)
$500,000	$5,000-10,000 (1-2%)
$750,000	$7,500-15,000 (1-2%)

How Much Should You Expect?

In Las Vegas, earnest money typically ranges from 1-3% of the purchase price. Higher deposits signal more serious buyers and provide you more protection if the deal falls through. When evaluating competing offers, larger earnest money deposits indicate stronger buyer commitment.

Cash buyers and investors sometimes offer larger deposits because they are not dependent on financing and have more certainty about closing.

Where Does the Money Go?

Earnest money is deposited into an escrow account held by a neutral third party, typically the title company or escrow company handling the transaction. Neither you nor the buyer can access these funds unilaterally. The escrow holder releases them according to the contract terms.

When Buyers Get It Back

Buyers are entitled to return of their earnest money if they cancel within contractual contingency periods:

Inspection contingency. If the buyer cancels due to inspection findings within the inspection period, earnest money is returned.

Financing contingency. If the buyer cannot obtain loan approval and cancels within the financing period, earnest money is returned.

Appraisal contingency. If the appraisal comes in low and parties cannot agree on a solution, earnest money typically returns to the buyer.

Other contingencies. Sale of buyer's home, HOA document review, and other contingencies allow cancellation with earnest money return if exercised properly.

When You May Keep It

You may be entitled to keep the earnest money if the buyer defaults outside of contingency protections:

Canceling without valid reason. If the buyer simply changes their mind after contingencies expire.

Missing deadlines. Failing to perform required actions within contract timeframes.

Refusing to close. Being ready, willing, and able to close but refusing to do so.

However, obtaining forfeited earnest money often requires both parties to sign a release. If the buyer disputes forfeiture, the funds may remain in escrow while the dispute is resolved, potentially through mediation or legal action.

Disputes Over Earnest Money

When buyers and sellers disagree about who gets the earnest money:

Escrow holds the funds. The title company cannot release money without agreement or court order.

Mediation may be required. Many contracts require mediation before legal action.

Legal costs add up. Fighting over a few thousand dollars in court often costs more than the amount in dispute.

Practical resolution. Many disputes end with splitting the deposit rather than prolonged fights.

Evaluating Earnest Money in Offers

When reviewing offers, consider earnest money as one factor:

Larger is better. More money at risk suggests a more committed buyer.

Quick deposit is better. Buyers who deposit earnest money promptly demonstrate readiness.

Consider the whole picture. A slightly lower earnest money with stronger financing may be better than high earnest money with shaky qualification.

Protecting Yourself

To maximize earnest money protection:

Request adequate amounts. Do not accept minimal deposits from buyers who could easily walk away.

Verify deposit. Confirm earnest money has actually been deposited into escrow.

Understand contingencies. Know what allows the buyer to cancel with refund.

Watch timelines. Track when contingencies expire so you know when your protection increases.

Where to Start

If you are selling your Las Vegas home and have questions about earnest money or evaluating offers, I can help you understand the terms and protect your interests throughout the transaction.

Ready to discuss your sale? Request a free home evaluation here or reach out directly to talk through your options.

Frequently Asked Questions About Earnest Money Deposits in Las Vegas

Q1: What is earnest money and why do buyers provide it?

Earnest money is a good faith deposit that buyers submit with their offer to demonstrate serious intent to purchase your home. It shows they have financial commitment and are not likely to walk away without cause. The deposit is held in escrow and typically becomes part of the buyer's down payment or closing costs when the sale completes.

Q2: How much earnest money should I expect from a buyer in Las Vegas?

In Las Vegas, earnest money typically ranges from 1-3% of the purchase price. For a $500,000 home, expect between $5,000-$15,000. Larger deposits generally indicate more serious buyers with stronger commitment. Cash buyers and investors sometimes offer higher deposits since they have more certainty about closing.

Q3: When can a buyer get their earnest money back?

Buyers can receive their earnest money back if they cancel within contractual contingency periods, including: inspection contingencies (if issues are found during inspection), financing contingencies (if they cannot obtain loan approval), appraisal contingencies (if the home appraises below contract price), or other contingencies like HOA review or sale of their current home. Proper cancellation within these timeframes entitles them to a full refund.

Q4: When can I keep the buyer's earnest money?

You may be entitled to keep earnest money if the buyer defaults after contingencies expire. This includes situations where the buyer cancels without valid reason, misses important deadlines, or refuses to close despite being ready and able to do so. However, obtaining forfeited earnest money often requires both parties to agree, and disputes may require mediation or legal action to resolve.

Q5: Where is the earnest money held during the transaction?

Earnest money is deposited into an escrow account held by a neutral third party, typically the title company or escrow company handling your transaction. Neither you nor the buyer can access these funds unilaterally. The escrow holder only releases the money according to the contract terms or with written agreement from both parties.

Q6: What happens if there's a dispute over earnest money?

When buyers and sellers disagree about earnest money, the escrow company holds the funds until the dispute is resolved. Most contracts require mediation before legal action. Keep in mind that legal costs to fight over earnest money often exceed the deposit amount itself, which is why many disputes end with parties agreeing to split the deposit rather than pursuing prolonged litigation.

Q7: How should I evaluate earnest money when comparing multiple offers?

Consider earnest money as one factor among many. Larger deposits suggest more committed buyers with more to lose if they cancel. Quick deposit timing demonstrates readiness and seriousness. However, don't focus solely on earnest money—a slightly lower deposit from a well-qualified buyer with strong financing may be better than a high deposit from a buyer with questionable loan approval prospects.

Q8: How can I protect myself regarding earnest money as a seller?

Request adequate earnest money amounts (avoid accepting minimal deposits), verify that the deposit has actually been made to escrow, understand all contingencies that allow the buyer to cancel with refund, and track important timelines so you know when contingencies expire and your protection increases. Your real estate agent can help monitor these deadlines and ensure proper procedures are followed.

Q9: Does a larger earnest money deposit guarantee the buyer will close?

No, a larger earnest money deposit doesn't guarantee closing, but it does indicate stronger buyer commitment and provides you more protection if the deal falls through outside contingency periods. Buyers with more money at risk are generally more motivated to work through challenges. However, buyers can still cancel and receive their deposit back during valid contingency periods regardless of the amount.

Q10: What should I do if a buyer cancels and refuses to release the earnest money to me?

First, review the contract with your agent to determine if you're legally entitled to the deposit. If you have valid grounds, request that the buyer sign a release. If they refuse, you may need to pursue mediation (often required by the contract) or potentially legal action. However, consider whether the cost and time of fighting for the deposit is worth the amount involved—sometimes negotiating a partial settlement is more practical.