Making an offer on a Petaluma home? Your earnest money is one of the first signals to the seller that you are serious. It also plays a big role in how protected you are if plans change. In this guide, you’ll learn how deposits work here, what’s typical in Sonoma County, which contingencies safeguard your money, and how to avoid wiring pitfalls. Let’s dive in.
Earnest money basics
Earnest money is a good‑faith deposit you include with your offer to show commitment to the purchase. In Sonoma County, it is usually held by a neutral escrow or title company and credited to you at closing. If the sale does not close, what happens to the deposit depends on the contract and whether your contingencies still protect you.
The deposit is not an extra fee. It is part of your total funds to close, applied to your down payment and closing costs when the transaction successfully records.
How much in Petaluma?
Most offers in California include a deposit equal to about 1–3% of the purchase price in typical conditions. In multiple‑offer situations, buyers sometimes offer more to stand out. In less competitive moments, you may see smaller flat‑dollar deposits.
Petaluma buyers also use a two‑step structure: an initial amount with the offer and an additional deposit due a few days after acceptance. For example, on a $900,000 home, a 1% deposit is $9,000 and a 3% deposit is $27,000. Your exact strategy should reflect price point, competition level, your financing, and the contingencies you include.
Who holds your deposit
Best practice is to deposit funds directly with the named escrow or title company. You should receive a receipt and an escrow number showing who holds the money. Some brokerages can hold deposits in a trust account, but neutral escrow/title is common in Sonoma County.
At closing, escrow credits your earnest money on the Closing Disclosure. If the deal cancels, escrow releases funds only according to the purchase agreement and written instructions from both parties or a court order.
Contingencies that protect you
Contingencies give you the right to cancel within set timeframes and recover your deposit when used correctly. Common protections include:
Inspection contingency
You can inspect the property and, if issues arise, negotiate repairs or credits. If you cancel within the inspection period per the contract, your deposit is typically refundable.
Loan/financing contingency
If you cannot obtain your stated loan by the deadline despite good‑faith efforts, you can usually cancel and recover your deposit. Keep clear records of communications with your lender.
Appraisal contingency
If the appraisal comes in below the purchase price, you can renegotiate, bring in more cash, or cancel per the contract. The deposit remains protected if you act within the appraisal window.
Title, HOA, or sale‑of‑home contingencies
Title issues, HOA document review, or the need to sell your current home can be addressed with specific contingency clauses and timelines that preserve your deposit when used as written.
Once you remove a contingency in writing or allow the deadline to pass, your deposit protection for that item typically ends unless the seller breaches.
Typical timelines in Petaluma
These timelines reflect common practice using widely used California forms. Your accepted contract controls the actual dates.
- Escrow period: about 30–45 days from acceptance
- Inspection period: about 10–17 days
- Loan/financing contingency: about 17–21 days
- Appraisal ordering and review: typically within the financing window
- Additional deposit (if used): often due within 3–5 days after acceptance
In active Petaluma markets, sellers may favor shorter contingency windows. Make sure all dates are clear and realistic for you and your lender.
How to send and safeguard funds
- Deposit only to the named escrow or title company and obtain a written receipt.
- Use a check payable to escrow/title or a wire sent using instructions you have verified by calling the escrow officer at a known, published company number.
- Do not accept wiring instructions sent by an unexpected email without verbal confirmation. Wire fraud attempts are common in real estate.
- Keep all deposit records, including the receipt and any confirmation from escrow.
If the deal falls through
- If you cancel within a valid contingency window, your deposit is typically returned.
- If you default after removing contingencies, the seller may pursue remedies that can include keeping the deposit, subject to the contract.
- Escrow will not release funds without mutual written instructions, a court order, or a similar directive. If there is a disagreement, parties often negotiate or use mediation.
Smart buyer strategies
- Match deposit size to your risk. Bigger deposits can look stronger but increase risk after contingencies are removed.
- Use clear, written contingency deadlines and track them closely.
- Consider a two‑step deposit to show commitment while you complete early due diligence.
- Keep a paper trail of inspections, lender milestones, and any agreed changes to timelines.
- Confirm wiring instructions by phone with the escrow officer before sending money.
Two quick examples
- Closing credit example: You buy a Petaluma home for $900,000 and deposited $18,000. At closing, that $18,000 shows as a credit toward your total cash to close.
- Refund example: Your inspection reveals a significant roof issue. You cancel within the inspection period as allowed by your contract. Escrow receives mutual instructions and returns your deposit.
Ready to move forward?
If you want a deposit strategy that fits the Petaluma market and your goals, let’s talk. Our team helps you set the right amount, choose the right contingencies, and protect your funds from offer to closing. Reach out to Cozza Homes Inc. to get started.
FAQs
What is earnest money in a Petaluma home purchase?
- It is a good‑faith deposit that shows sellers you intend to buy; escrow holds it and applies it to your funds at closing.
How much earnest money do buyers usually put down in Sonoma County?
- Many offers include about 1–3% of the purchase price, with higher or lower amounts based on competition, price point, and contingencies.
Who holds my earnest money and how is it protected?
- A neutral escrow or title company typically holds the deposit; it is released only according to the purchase contract and written instructions.
Which contingencies protect my deposit the most?
- Inspection, loan/financing, appraisal, and title or HOA review contingencies provide clear protection when used within their timelines.
What are common contingency deadlines in Petaluma?
- Inspection is often 10–17 days, loan/financing about 17–21 days, and escrows commonly run 30–45 days, depending on the agreement.
Can I get my deposit back if the appraisal is low?
- If you included an appraisal contingency and act within the window, you can renegotiate or cancel and recover the deposit per the contract.
How do I avoid wire fraud when sending my deposit?
- Call the escrow officer at a verified company number to confirm wiring instructions before sending funds and never rely solely on email instructions.
What happens to my earnest money if I back out after removing contingencies?
- The seller may claim the deposit per the contract; outcomes vary and often involve negotiation or dispute resolution.
