Putting thousands down before you even own the home can feel risky. In Maine, that upfront deposit is called earnest money, and it plays a clear role in getting from an accepted offer to a successful closing. If you understand what it covers, when it is refundable, and how to protect it, you will write stronger offers and avoid surprises. This guide breaks down Portland and Greater Portland practices so you can move forward with confidence. Let’s dive in.
Earnest money basics in Maine
What it is and what it covers
Earnest money is a good‑faith deposit that shows you are serious about buying. It is not your entire down payment, but it is typically credited toward the cash you need at closing. That means it can cover part of your purchase price, closing costs, or both when you sign final documents. It also provides security to the seller if a buyer defaults, depending on the contract’s terms and contingencies.
Who holds your deposit
In Maine, the purchase contract controls who holds the funds and when they can be released. Your deposit is usually placed with the listing brokerage, a title or closing company, or an attorney who keeps it in an escrow or trust account. Brokers must handle client funds under state rules, and escrow holders will not release disputed deposits without written agreement from both parties or a court order. Always review the specific Residential Purchase and Sale Agreement used for your deal.
Typical amounts and timing in Portland
How much to offer
In Portland and across Cumberland County, typical earnest money ranges often fall between 1 percent and 3 percent of the purchase price. For lower‑priced homes, a fixed amount such as 1,000 to 5,000 dollars is common. Mid‑price and high‑demand properties often see 1 percent or more, and in very competitive neighborhoods, buyers may offer 2 percent to 3 percent or higher. The exact amount is negotiated in each offer and depends on market conditions, price tier, and the overall strength of your terms.
When and how you deliver
Most Maine contracts require you to deliver the deposit shortly after mutual acceptance, commonly within 24 to 72 hours. The contract will specify the deadline and the escrow holder, and delivery can be by wire or check depending on instructions. Ask for clear wiring directions or check payee details, and request a written receipt immediately. Keep proof of delivery in your records.
How your deposit is applied at closing
If you close, your earnest money is credited toward the funds you must bring to the table. It reduces the amount of cash you need to complete your down payment, pay closing costs, or both. Whether the deposit earns interest depends on the escrow holder and account type, and many broker trust accounts do not pay interest to buyers. Check your contract or escrow agreement for how any interest is handled.
Contingencies that protect your money
Inspection contingency
With an inspection contingency, you can inspect the property during a set period and negotiate repairs or credits. If significant issues are found, you can cancel within the inspection window and recover your deposit by following the contract’s notice steps. Protection is procedural, so you must send written notice within the deadline and in the format the contract requires. Missing the cutoff can put your deposit at risk even if the problem is real.
Financing and appraisal contingencies
A financing contingency protects you if your loan is denied despite good‑faith efforts. If that happens, you can often cancel and get your deposit back by sending notice and any required documentation before the deadline. Appraisal language varies, but if the appraisal comes in below the price, the contingency may allow renegotiation or cancellation with a refund when you follow the process in time. If you do not meet timing or documentation rules, the seller may claim the deposit.
Title and other contingencies
Title contingencies allow you to cancel if a title issue cannot be cleared as required by the contract. Other protections may address lead paint, septic, wetlands, or the sale of your current home. Each one has deadlines and notice requirements that must be met to preserve your earnest money.
Real Portland examples
- Example A: You agree to buy a 450,000 dollar home with a 6,000 dollar deposit and a 10‑day inspection period. The inspector finds a major foundation issue. You send written termination within the period as the contract requires. Your 6,000 dollars is refunded.
- Example B: You discover a defect and ask for repairs but do not send the written termination your contract requires before the inspection window closes. You later cancel. Because the deadline passed, the seller may claim the deposit due to buyer breach.
- Example C: Your loan is denied even after you make a good‑faith effort to obtain financing. You follow the financing contingency procedure on time, including providing the denial. Your deposit is refunded. If you miss the notice deadline or do not meet the effort standard, the seller may keep it.
If a deal falls apart
When sellers can keep the deposit
Contracts often include a liquidated damages clause that lets the seller keep the earnest money if the buyer defaults. This provision is common and generally enforceable if the amount is reasonable. A seller could also pursue other remedies such as additional damages or specific performance, but that is less common and depends on the facts and the contract.
If the seller breaches
If the seller breaches after mutual acceptance, your remedies can include the return of your deposit, specific performance, or other damages. The dispute‑resolution language in your contract controls the process, which may require mediation or arbitration. If a dispute arises over the deposit, the escrow holder may keep funds in the account until both parties agree in writing or a court issues an order.
Practical steps to protect your deposit
- Read your contract closely. Note deadlines, who holds the funds, how notices must be delivered, and dispute rules.
- Use written notice for all contingency actions. Send it before the deadline and in the form the contract requires.
- Get a receipt when you deliver funds, whether by wire or check.
- Keep copies of inspection reports, appraisal results, loan denials, and all emails or notices. These documents support your entitlement to a refund.
- Consider using a title company or your attorney to hold the deposit if you want extra clarity on accounting and interest.
- If a dispute seems likely, consult a Maine real estate attorney early.
What earnest money does and does not cover
- What it covers: Earnest money is credited to your buyer funds at closing, reducing the cash you need for the purchase price and closing costs. If you default without protection from contingencies, the deposit may serve as the seller’s agreed remedy.
- What it does not cover: Earnest money is not an extra fee and not the full down payment on its own. It does not pay the seller just for accepting your offer unless you breach the contract. It is not guaranteed to be refundable if you miss deadlines or fail to follow procedures.
Local tips for Portland buyers
- Calibrate your deposit to the neighborhood. In high‑demand Portland areas, a larger deposit can help your offer stand out. In slower segments, a modest deposit may be acceptable.
- Balance risk and strength. Pair deposit size with tight, realistic contingency periods and a clear plan to meet them.
- Verify wiring instructions by phone with the escrow holder before sending funds, and avoid last‑minute transfers that could miss the deadline.
- Aim for a clean paper trail. Portland escrow holders and brokers follow strict trust‑account rules, and clear documentation helps you receive a quick refund if you cancel within your rights.
You deserve a purchase plan that protects every dollar you put at risk. As a boutique brokerage with integrated appraisal expertise, we help you set the right deposit, structure contingencies, and hit every deadline so your funds stay protected. If you are buying in Portland or the surrounding suburbs, we would be honored to guide you. Have questions about earnest money or offer strategy? Reach out to The Moulton Group RE to get personalized advice for your next move.
FAQs
How much earnest money should I offer in Portland, Maine?
- Typical ranges are 1 percent to 3 percent of price, with lower fixed amounts common on modest homes; tailor the deposit to market conditions and your risk tolerance.
Is earnest money refundable if the appraisal is low in Maine?
- Often yes if your contract includes appraisal or financing protection and you follow the notice steps and deadlines for renegotiation or cancellation.
Who usually holds earnest money in Portland deals?
- Listing brokerages, title or closing companies, or attorneys commonly hold deposits in escrow; your contract will name the holder.
When is earnest money due after an accepted offer in Maine?
- Most contracts require delivery within 24 to 72 hours after mutual acceptance, by wire or check per the escrow holder’s instructions.
Does earnest money count toward my down payment at closing?
- Yes, it is credited to your buyer funds at closing, reducing the cash you must bring for the purchase price, closing costs, or both.
