Buying in Malden moves fast. When you finally spot the right home, the last thing you want is confusion around the deposit that goes with your offer. If you have heard the term “earnest money” and wondered how much to put down, who holds it, or when you might get it back, you are not alone. In the next few minutes, you will learn how earnest money works in Massachusetts, what is common in Malden, and the simple steps you can take to protect your funds and strengthen your offer. Let’s dive in.
What earnest money is
A simple definition
Earnest money, sometimes called a deposit, is a good‑faith payment you submit with your offer to buy a home. It shows the seller you intend to move forward. If the sale closes, that money is applied to your purchase price.
Not your full down payment
Your deposit is not your full down payment or all closing funds. It is a portion that is usually credited to you at closing. You will still need to bring the rest of your down payment and closing costs per your loan and contract.
Why it matters in Malden
Malden’s proximity to Boston can create quick timelines and strong competition. Sellers often look for signs that a buyer is serious, and a clear, well-documented deposit helps. A thoughtful deposit strategy can make your offer more compelling while keeping your risk in check.
How deposits work in Massachusetts
The Purchase & Sale Agreement
After an accepted offer, Massachusetts transactions typically move to a written Purchase & Sale Agreement, often called the P&S. The P&S spells out deposit amounts, who will hold the money, deadlines, contingencies, and what happens if either side defaults. Many buyers use an attorney to review or draft the P&S language.
Who holds the money
Your deposit is placed in an escrow account. In Massachusetts, the escrow holder is commonly an attorney for the buyer or seller, a listing broker using a regulated trust account, or a title company. If a broker holds the funds, state rules require those funds to be segregated. Always ask for a written receipt.
When you pay
Offers in this area often call for deposit delivery within 24 to 72 hours of acceptance. The P&S should specify the exact timing, the escrow agent, and how the funds must be delivered.
What happens at closing
If the sale closes, your escrowed deposit is applied to your purchase price. If the deal ends for a reason covered by a contingency, the deposit is typically returned. If there is a dispute, the escrow agent may hold the funds until there is a written mutual release or a court order.
How much to offer in Malden
Typical earnest money in many U.S. markets ranges around 1 to 3 percent of the purchase price. In Greater Boston, including Malden, you may see both modest deposits and larger deposits depending on demand and whether multiple offers are expected. The right number balances competitiveness with your comfort level.
Consider these factors:
- Market temperature for similar Malden homes
- Your budget and risk tolerance
- Whether you expect multiple offers
- Strength of your other terms, like price and contingencies
Key point: a higher deposit can help your offer, but it also increases potential loss if you miss a deadline or default outside of your rights. Choose an amount that fits your goals and safeguards.
Protect your deposit with contingencies
Common buyer protections
Contingencies are your main safety net. The P&S often includes:
- Inspection contingency
- Financing or mortgage contingency
- Appraisal contingency or appraisal-related terms
- Title review or condo document review periods when applicable
If you end the deal within a valid contingency period and follow the contract notice rules, the deposit is typically refundable.
Deadlines and documentation matter
Pay close attention to inspection windows, mortgage commitment dates, and any cure or notice periods. Keep proof of inspections, lender timelines, and all notices. If you need to terminate, do it in writing before the deadline. That is how you preserve refund rights.
If a party defaults
Many P&S agreements include a liquidated damages clause stating the seller may keep the deposit if the buyer breaches. If a seller defaults, you may be entitled to a return of the deposit and possibly damages, depending on the facts and contract language. In any dispute, clear documentation and timely written notices are critical.
Step-by-step deposit checklist
Use this quick checklist to stay organized:
- Get a written mortgage pre-approval and confirm the lender’s timeline.
- Discuss deposit strategy with your agent, including amount and delivery timing.
- Name the escrow holder in your offer, with contact information when possible.
- Confirm acceptable forms of payment, such as certified check or wire.
- Before wiring, call a known number to verify instructions. Wire fraud is a risk.
- Deliver funds by the deadline and request a written receipt immediately.
- Save a copy of the canceled check or wire receipt.
- Keep a copy of the signed P&S with deposit terms highlighted.
- Save all emails and correspondence related to deposit delivery and any changes.
Writing strong, clear deposit terms
Your offer and P&S should state:
- Exact deposit amount
- Escrow agent name and address, if known
- Delivery deadline for the deposit after acceptance
- That the deposit is applied to the purchase price at closing
- Which contingencies allow a refund and the exact deadlines
- A release provision that requires mutual written release or a court order
Clarity in the contract helps both sides avoid misunderstandings and protects your rights.
Smart strategies in a competitive market
You can present a strong offer while managing risk:
- Pair a reasonable deposit with a clear, fast inspection timeline
- Strengthen your overall terms, such as price or flexibility on closing date
- Consider appraisal language that addresses shortfalls before they happen
- Keep communication timely and in writing
- Coordinate closely with your lender and attorney to meet dates
If you are uneasy about a larger deposit, talk with your agent about other ways to make your offer more attractive.
Special notes for Malden condo buyers
Condominiums add an extra layer of review. You will want time to review condo documents, rules and regulations, and financials. Make sure your P&S includes a document review period that aligns with your inspection and financing timelines. If you use FHA or VA financing, confirm the building’s approval status early, since that may affect timing and your contingency strategy.
If something goes wrong
How refunds usually work
If you end the deal within a valid contingency period and provide proper written notice, your deposit is typically refundable. The escrow agent follows the contract and will release funds once the parties sign a mutual release or an order is issued.
If there is a dispute
Do not authorize release of funds until you understand your rights. The escrow agent will usually hold the money until both sides agree in writing or a court resolves it. Stay in close contact with your agent and your attorney.
Local closing logistics to expect
Closings in Malden are handled by attorneys and title companies that work with the appropriate Middlesex County Registry of Deeds. Your team will coordinate deed recording and final numbers. Ask early about the closing timeline, how your deposit will be credited, and what you need to bring for a smooth finish.
The bottom line for Malden buyers
Earnest money shows the seller you are serious and helps you compete in a fast-moving market. Your best protection is simple: clear contract language, well-managed contingencies, strict attention to deadlines, and complete documentation. With a smart deposit strategy and the right local team, you can write a confident offer and keep risk in check.
Ready to talk through deposit strategy for a specific Malden home? Connect with the neighborhood team at Coldwell Banker First Quality Realty for local guidance tailored to your goals.
FAQs
What is earnest money in a Malden home purchase?
- It is a good‑faith deposit submitted with your offer that is held in escrow and credited to your purchase price at closing if the sale completes.
How much earnest money is typical in Malden?
- Many buyers see deposits around 1 to 3 percent of the price, but amounts vary with competition and property type in Greater Boston markets.
Who holds my deposit in Massachusetts?
- Escrow is commonly held by an attorney, a listing broker using a trust account, or a title company, with written receipts and segregation of funds required.
When is earnest money refundable in Massachusetts?
- It is typically refundable if you terminate within valid contingencies, such as inspection or financing, and provide written notice by the contract deadline.
What happens if the appraisal comes in low?
- If your P&S includes an appraisal or financing contingency and you act within the deadline, the deposit is usually refundable if you choose to terminate.
Can a seller keep my deposit if I default?
- If your contract includes a liquidated damages clause and you breach outside your rights, the seller may be entitled to keep the deposit as the agreed remedy.
How long can an escrow agent hold funds during a dispute?
- Escrow holders generally keep funds until there is a mutual written release or a court order, which can take time depending on the situation.
