Earnest money in Arizona.
What it is
Earnest money is a good-faith deposit a buyer puts down once an offer is accepted. It tells the seller the buyer is serious enough to put real money on the line while inspections, appraisal, and underwriting play out.
It is held by the escrow company - never by the seller, never by the agent.
How much is typical
In Arizona, earnest deposits typically run 1% to 3% of the purchase price. In competitive situations, larger deposits can make an offer stand out. In slower markets, smaller deposits are common.
When it is refundable
The Arizona purchase contract gives the buyer specific contingency windows - usually for inspection, appraisal, loan approval, and HOA disclosure review. If the buyer cancels for a reason allowed inside those windows, the deposit is refunded.
Once those windows close, the deposit is generally at risk if the buyer walks away for reasons not covered by the contract.
What happens if there is a dispute
Escrow cannot pick a side. If buyer and seller disagree on who gets the deposit, escrow holds the funds until both parties sign cancellation instructions or a court issues an order. This is one of the most important reasons to use a neutral, experienced escrow team.
What happens at closing
If the deal closes, the earnest deposit is credited to the buyer on the settlement statement and applied toward down payment and closing costs. You will see it as a credit on the buyer's side of the statement, not as a separate refund.
Common questions about earnest money
What is earnest money?
Earnest money is a good-faith deposit a buyer puts down when a contract is accepted. It signals serious intent and is held in escrow until closing, when it gets credited toward the buyer's down payment and closing costs.
Is earnest money refundable?
Yes, during the buyer's contractual contingency periods (inspection, appraisal, loan, HOA review). If the buyer cancels for a reason allowed by the contract within those windows, the deposit is refunded. Outside of those windows, it is usually at risk.
How much earnest money should I put down in Arizona?
Typical Arizona earnest deposits range from 1% to 3% of the purchase price. In competitive markets, larger deposits can strengthen an offer. Your agent will recommend an amount based on the property and the competition.
Who holds the earnest money?
Earnest money is held by the escrow or TITLE company - never by the seller or the agent. Escrow only releases it according to written instructions signed by both parties or a court order.
Can a seller keep the earnest money?
Only if the buyer breaches the contract outside of the contingency periods and both parties sign cancellation instructions allowing the seller to keep it. If there is a dispute, escrow holds the funds until the parties agree in writing or a court directs.
What happens to earnest money at closing?
It is credited to the buyer on the settlement statement and applied toward the down payment, closing costs, or both. You see it on the buyer's side of the statement as a credit.