Making an offer on a home in Lebanon or the Upper Valley can move fast. Then you hear about “earnest money” and wonder how much to put down, when to pay it, and whether you can get it back if something goes wrong. You are not alone. Many buyers want a simple, local guide they can trust.
This article explains how earnest money works in New Hampshire and Vermont, with a spotlight on Lebanon and Grafton County. You will learn typical deposit amounts, who holds the funds, how contingencies protect you, and the key differences across the river. You will also get a practical checklist to keep your deposit safe and your offer competitive. Let’s dive in.
What earnest money is
Earnest money, sometimes called a good‑faith or escrow deposit, is a sum you pay when your offer is accepted to show commitment. It is held in an escrow or trust account and credited back to you at closing. If the deal ends, the contract controls whether the money is returned or released to the seller.
This deposit is different from your down payment. Your down payment is paid at closing as part of your buyer equity. Earnest money is a separate deposit you make early in the process to secure the contract.
Local practice in Lebanon
In the Upper Valley, including Lebanon and Hanover, the Purchase and Sale Agreement sets the rules. There is no single statewide standard deposit amount. The agreement spells out how much you will pay, who will hold the funds, when the money is due, and what happens if either party defaults.
Who holds the money varies by transaction. In New Hampshire, title companies or closing agents often handle escrow. In Vermont, real estate attorneys are more commonly involved. It is also common for a listing broker’s trust account to hold the deposit. Confirm the escrow holder in writing inside your offer.
Typical earnest money amounts
Local norms depend on price point and market conditions:
- Many buyers offer about 1% to 3% of the purchase price.
- Some use a flat amount, often in the range of 1,000 to 5,000 dollars.
- In a competitive situation, buyers may increase the deposit to strengthen an offer. In a slower market, smaller deposits may be accepted.
Choose an amount that signals seriousness without overexposing you. Your agent can help calibrate what looks competitive for your target property.
When you pay and how it is delivered
Your contract will set a deposit deadline. In many Upper Valley deals, you deliver the funds at acceptance or within a few business days. Missing the deadline can breach the contract, so plan ahead.
Escrow holders typically accept a certified cashier’s check, a personal check if allowed, or a wire transfer. If wiring, always verify the account details by phone using a trusted, published number. Ask for a written receipt that shows the amount received and the escrow account holder.
Most small deposits do not accrue interest for buyers, though the escrow agreement should state whether interest is earned and who receives it.
Buyer protections and contingencies
Your contingencies are the safety valves for your earnest money. Common protections include:
- Home inspection contingency. You inspect within a set period and may request repairs or terminate.
- Financing contingency. You have time to secure lender approval.
- Appraisal contingency. The property must appraise at or near the price, or you may renegotiate or terminate.
- Title contingency. You must be able to obtain clear, insurable title.
- Sale of home contingency. Used less often, it can weaken an offer but may be needed in some cases.
If a contingency is not satisfied and you terminate in writing before the deadline, your deposit is typically returned. If you miss a deadline, proceed without addressing the issue, or default after contingencies expire, the seller may be entitled to keep your deposit as damages, depending on the contract.
Liquidated damages and defaults
Many Purchase and Sale Agreements include a liquidated damages clause. This clause often allows the seller to keep the earnest money if the buyer defaults. It can also limit the seller to that amount, rather than pursuing larger damages. If the agreement does not include such a clause, the seller may seek other remedies in court. The exact outcome depends on your contract and state law.
If the seller breaches, you may seek a return of your deposit and, in some cases, pursue specific performance or damages. Always read your contract and involve a local real estate attorney with questions about enforceability.
Disputes and how they are handled
Most earnest money disputes arise when one side claims a contingency was not met and the other side disagrees. Your contract may require mediation or arbitration before a lawsuit. If the escrow holder cannot release funds due to a dispute, they may use an interpleader process to deposit the money with a court.
The best prevention is procedural. Document inspections and requests, follow the notice rules in your contract, and do not miss written deadlines. A late termination notice is one of the most common reasons buyers lose a claim to their deposit.
Escrow safety and wire fraud
Wire fraud is a real risk in real estate. Protect your funds with simple steps:
- Verify wiring instructions by calling the title company or attorney at a phone number you find on their official website or a known business card.
- Do not rely on wiring details sent by email without direct confirmation.
- Use secure portals for document exchange.
- Consider delivering a cashier’s check in person if that is acceptable and practical.
A quick verification call can prevent a costly mistake.
NH vs VT nuances in the Upper Valley
You may shop on both sides of the river. The fundamentals of earnest money are similar, but there are practice differences:
- New Hampshire transactions often use title companies or closing agents for escrow and closing.
- Vermont transactions more commonly involve real estate attorneys as escrow agents and closers.
- In both states, listing brokers can hold deposits in a licensed trust account when the parties agree.
Always confirm who holds the deposit, how to deliver funds, and what the release rules are in your specific contract.
Buyer checklist for Lebanon
Before you write an offer:
- Pick a deposit amount that looks competitive but protects you.
- Decide who will hold the funds and include that in your offer.
- Line up your delivery method and timing, such as a cashier’s check or a verified wire.
When drafting the offer:
- Specify the deposit amount, escrow holder, and deposit deadline.
- Set clear contingency periods for inspection, financing, appraisal, and title.
- Understand any liquidated damages clause and what happens if you default.
After acceptance:
- Deliver the deposit on time and get a written receipt.
- Use your inspection period fully and respond in writing before the deadline.
- Keep copies of all notices and follow the contract’s delivery instructions.
If issues arise:
- Contact your agent and, if needed, a local real estate attorney right away.
- Save all documents, emails, and reports.
- Follow the contract’s dispute steps, such as mediation or arbitration.
Smart offer strategies
In a competitive Upper Valley segment, a larger earnest money amount can make your offer stand out. Balance that advantage with risk. If you are considering a large or partially nonrefundable deposit, do it only when contingencies and timelines are crystal clear and after getting advice from your agent and attorney.
Be careful with contingency waivers. Skipping inspection, appraisal, or financing protections may help you win the house, but it increases the chance you could lose your deposit if you cannot close. Tight calendar management can be just as powerful as a higher deposit, so track every deadline and keep your lender and inspector on a short timeline.
The bottom line
Earnest money is a simple concept with important details. In Lebanon and the broader Upper Valley, your contract controls everything: amount, timing, escrow holder, and what happens if plans change. With a clear offer, firm deadlines, and verified escrow steps, you can protect your deposit and present an offer that sellers take seriously.
If you want a walkthrough of current norms and strategies for your price point, reach out for a local perspective and a disciplined plan from first offer to closing. Connect with Andy Clouse to talk through your goals and next steps.
FAQs
How much earnest money is typical in Lebanon NH?
- Many buyers offer 1% to 3% of the price, or a flat 1,000 to 5,000 dollars, adjusted for competitiveness and property price.
When is earnest money due after an accepted offer?
- Your contract sets the deadline, often at acceptance or within a few business days, so plan funds and delivery ahead of time.
Who holds earnest money in NH and VT?
- Common holders include the listing broker’s trust account, a title company or closing agent, or an attorney’s escrow account, as specified in the contract.
Is earnest money refundable after a home inspection?
- If your inspection contingency allows termination and you give written notice before the deadline, the deposit is typically refundable.
What happens to my deposit if I default on the contract?
- Many agreements let the seller keep the deposit as liquidated damages if you default after contingencies expire, subject to the contract’s terms.
How do I avoid wire fraud when sending a deposit?
- Confirm wiring instructions by phone using a verified number, use secure portals, and consider a cashier’s check delivered in person if allowed.
