Wondering how much you should put down as earnest money when you find a home in Shepherdsville? If you are a first-time buyer or relocating to Bullitt County, this part of the offer can feel confusing. The good news is that earnest money is straightforward once you know what it is, how much to offer locally, and how to protect it. In this guide, you will learn the basics, local ranges, refund rules, timelines, and practical steps to move with confidence. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you make after a seller accepts your offer. It shows you intend to move forward and gives the seller some security while the home is off the market.
Your deposit is held in a neutral escrow account, typically by a title or closing company, or sometimes in the listing broker’s trust account in line with Kentucky rules. You should receive a written receipt and instructions that show who is holding the funds, when they were deposited, and how they can be released.
If the sale closes, your earnest money is not an extra fee. It is applied toward your down payment or closing costs at closing.
How much in Shepherdsville
Local expectations in Shepherdsville and greater Bullitt County are shaped by price point and competition. A common starting guideline is about 1 percent of the offer price or a flat amount in the $1,000 to $5,000 range.
- Lower-priced homes may see $500 to $1,000.
- Typical Shepherdsville offers often land around 1 percent.
- Highly competitive homes or higher price points can push deposits to $5,000 to $10,000 or more.
Your agent should tailor the amount to current market conditions, recent local sales, and the strength of your overall offer.
Example calculations
- Example A: Purchase price $180,000. A 1 percent deposit is $1,800. Some buyers might offer $1,000 if that aligns with local practice at the time.
- Example B: Purchase price $250,000. A 1 to 2 percent deposit is $2,500 to $5,000. In multiple offers, $5,000 can help you stand out.
- Example C: Purchase price $350,000. A buyer may offer $7,000 to $10,000 or more to strengthen non-price terms, depending on comfort with risk.
How it protects you and the seller
Earnest money balances risk for both sides. Your contract will include contingency periods that protect you, and clear default terms that protect the seller if a buyer walks away without a covered reason.
Buyer protections and contingencies
These common contingencies allow you to cancel within agreed timelines and recover your deposit:
- Inspection contingency: Cancel during the inspection period if issues are unacceptable.
- Financing contingency: If your lender denies the loan by the deadline, you can cancel with proper documentation.
- Appraisal contingency: If the appraisal comes in low and you cannot reach terms, you can cancel.
- Title contingency: Unresolvable title defects can permit cancellation and refund.
- Sale-of-home contingency: If tied to selling your current home and it does not sell in time, you can cancel per the contract.
- HOA document review, if applicable.
When a seller may keep it
A seller may be entitled to your deposit if you breach the contract after contingencies expire or are waived. That can include:
- Missing deposit deadlines or failing to deliver the funds as required.
- Walking away after all contingencies are removed.
- Canceling without following required written notice procedures.
Contracts typically explain how a seller can claim the deposit and what steps must be followed.
Disputes and documentation
If you and the seller disagree on releasing funds, the escrow holder may keep the deposit in the trust account until there is a mutual written release or a court order. Some contracts include mediation or arbitration steps. Documentation is key.
Keep these records in case you need a refund under a contingency:
- Written cancellation within the contingency window
- Inspection reports and repair negotiations
- Lender denial letters
- Email or form notices delivered per the contract
Missing a deadline can limit your right to a refund, so track your dates carefully.
Timeline and how to pay
Here is a typical sequence for Shepherdsville transactions:
- Offer accepted: Your offer specifies the earnest money amount and who will hold it.
- Deposit deadline: The contract often requires delivery within 24 to 72 hours of acceptance. Confirm the exact timing in writing.
- Escrow holding: The title or escrow company deposits the funds in a regulated trust account and issues a receipt.
- Contingency period: You complete inspections, appraisal, and loan approval within agreed windows.
- Closing: The deposit is applied to your down payment or closing costs.
- If canceled under a valid contingency: You submit notices and documentation for a refund per the contract.
Payment methods usually include certified check, personal check payable per escrow instructions, or a wire transfer. If you wire funds, verify instructions by calling the escrow holder at a known phone number to prevent wire fraud. Always request a written receipt.
Shepherdsville buyer checklist
- Decide on a deposit amount with your agent based on price point and current Bullitt County conditions.
- Confirm the escrow holder’s name, contact information, and delivery instructions before sending money.
- Deliver funds within the contract deadline and get a written receipt.
- Calendar your contingency dates for inspection, appraisal, and financing, and send any cancellation in writing within those windows.
- Keep copies of all emails, notices, inspection reports, and lender documents.
- Verify wiring instructions by phone with the escrow holder to avoid fraud.
Seller checklist
- Confirm the earnest money amount and the deposit deadline in the accepted offer.
- Ensure the contract clearly names the escrow holder and outlines release procedures.
- Require prompt deposit and ask your agent for proof of receipt.
- Consult your listing broker or closing attorney before making any claim to the deposit in a dispute.
Local scenarios to know
- Inspection issue found: You have 10 days for inspections. The report reveals a significant foundation concern. You cancel by day 10 using the contract form and receive a full refund.
- Financing denial: You apply on time, but your lender denies the loan before the financing deadline. You provide the denial letter and recover your funds.
- Appraisal gap: The home appraises below contract price. If you have an appraisal contingency and cannot reach terms, you cancel and receive your earnest money back.
- Post-contingency default: You waived contingencies to win a competitive offer, then decide not to close. The seller may be entitled to keep the deposit per the contract.
Mistakes to avoid
- Offering too little or too much without context. Match your deposit to price point and competition.
- Missing deposit or contingency deadlines. Put dates on your calendar and set reminders.
- Skipping written notices. Use the contract forms to provide formal notice in time.
- Wiring funds without confirming instructions by phone with the escrow holder.
- Assuming refunds are automatic. Documentation and timing matter.
When to involve an attorney
If the escrow holder refuses to release funds without proper cause, or if a dispute persists after contract dispute steps, it can be appropriate to speak with a real estate attorney. Your agent can also help you understand the timelines and documentation your contract requires.
Get local guidance
Earnest money is a small part of your offer that makes a big difference in how strong and safe your Shepherdsville purchase feels. With clear timelines, the right amount, and solid documentation, you protect your deposit and give the seller confidence. If you want help tailoring your earnest money strategy to Bullitt County’s current market, connect with the local team that supports buyers, military families, and transferees across our region. Reach out to Olive + Oak Realty to walk through your options or request your free Home Strategy Session.
FAQs
What is earnest money in a Kentucky home purchase?
- It is a good-faith deposit you submit after a seller accepts your offer, held in escrow and applied to your down payment or closing costs at closing.
How much earnest money do Shepherdsville buyers typically put down?
- A common starting point is $1,000 to $5,000 or about 1 percent of the offer price, with lower amounts on lower-priced homes and higher amounts for competitive listings.
Can I get my earnest money back if my financing falls through?
- Yes, if your contract includes a financing contingency and you provide timely lender denial documentation before the deadline, you can cancel and recover your deposit.
Who holds the deposit and how do I pay it?
- A neutral escrow or title company, or sometimes the listing broker’s trust account, holds the funds. You can deliver by certified check, personal check per instructions, or wire transfer.
How fast do I need to deposit earnest money after acceptance?
- Many contracts require delivery within 24 to 72 hours, but your agreement controls the exact deadline. Confirm it in writing and get a receipt.
What happens to my earnest money at closing?
- It is credited toward your down payment or closing costs, reducing the cash you need to bring to closing.
