You found the Franklin home you love. Now the seller wants “earnest money” to take your offer seriously. How much should you put down, where does it go, and how do you keep it safe? In Williamson County’s competitive market, your deposit can help you win, but you should understand the rules before you send a wire. This guide breaks down amounts, timelines, protections, and smart strategies so you can move forward with confidence. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit that shows a seller you are serious. You submit it with your offer or soon after a signed agreement. If the sale closes, it is credited toward your purchase price or closing costs. If the deal falls apart without a contractual reason, the seller may keep the deposit as compensation for your default.
In a competitive market, earnest money signals commitment. A stronger deposit can make your offer more attractive, but it also raises your exposure if you waive protections or miss deadlines. Your contract controls when the money is refundable and how it is handled.
Tennessee contract basics
In Tennessee, the purchase agreement should state the earnest money amount, who will hold it, and the deadline for delivery. It also outlines when the deposit is refundable and what happens if either party defaults. Standard Tennessee forms used by local brokers include these details, along with dispute resolution steps.
Funds are usually held by a title or escrow company, or in a broker’s trust account. The timeline for deposit can vary by contract, but it is often within a few days of acceptance. Always confirm the exact deadline, payee, and delivery method in writing.
Key contingencies that protect you
- Inspection contingency: lets you inspect the home and cancel or negotiate if needed within a set window.
- Financing contingency: protects you if your mortgage loan is not approved by a specified date.
- Appraisal contingency: covers you if the appraisal comes in below the purchase price.
- Title contingency: ensures you receive clear, insurable title.
- Home sale contingency: allows you to cancel if your current home does not sell; less common in competitive markets.
If you cancel within a valid contingency window and follow the notice rules in your contract, you typically receive your earnest money back.
Typical amounts in Franklin
In many markets, buyers put down roughly 1 to 3% of the purchase price as earnest money, or a flat amount between $1,000 and $10,000. In higher-priced areas like Franklin, deposits often skew higher in dollar terms. In multiple-offer situations, buyers sometimes increase earnest money, shorten contingency deadlines, or both to strengthen an offer.
A larger deposit can help you stand out, but it also increases your risk if you waive protections or fail to meet deadlines. Choose an amount that balances competitiveness with your comfort level, and pair it with clear contingency timelines.
Where your money is held
Your deposit is usually made payable to the selected title or escrow company, or a broker’s trust account, as stated in your contract. The escrow holder keeps the funds until closing or until both parties authorize a release. At settlement, the money is credited to your down payment or closing costs.
Ask for a written receipt when your deposit is received. Keep copies of your contract pages that reference earnest money, plus any addenda that change the amount or timelines. Verify that the escrow holder is licensed and that your funds are handled according to state and brokerage rules.
When you must deposit
Your contract sets the deadline. Many offers require delivery within 48 to 72 hours of acceptance, but timelines vary. Deposits can be delivered by check, wire, or another method approved by the escrow holder. If your deadline falls on a weekend or holiday, confirm how your contract treats timing and when the next business day applies.
Do not assume the title company has received your funds. Get confirmation in writing. If you wire funds, verify instructions directly with the escrow holder at a trusted phone number before you send anything.
When you get it back
You can usually receive your earnest money back if you cancel within your contract’s contingency windows and give proper written notice. Common examples include canceling after an inspection that reveals issues, not receiving final loan approval by your financing deadline, an appraisal below contract price when protected by an appraisal contingency, or a title issue that cannot be cleared.
Your escrow holder will generally need a signed mutual release or instructions from both parties to disburse funds. Follow your contract’s process for notices and timelines so there is no confusion about your rights.
If financing or appraisal falls through
- Financing: If you are protected by a financing contingency and you do not receive loan approval by the deadline, you can cancel and request your earnest money back. Be ready to provide the required documentation.
- Appraisal: If your appraisal comes in low and your contract includes an appraisal contingency, you may cancel and receive your deposit back if you cannot reach a new agreement with the seller by the stated date.
What happens if you default
If you cancel outside of your contingency protections, miss a key deadline, or otherwise breach the contract, the seller may be entitled to keep your earnest money as liquidated damages. Your specific rights and remedies depend on your contract terms and Tennessee law. In some cases, a seller could also pursue other remedies. This is why clear timelines, communication, and documentation matter.
Compete without risking it all
In Franklin’s low-inventory environment, you can make a strong offer while still protecting your deposit. Consider these strategies:
- Increase earnest money without waiving key protections. A larger deposit plus realistic contingency deadlines can look both serious and responsible.
- Shorten, do not remove, contingencies. For example, a shorter inspection window can reassure a seller while keeping your protection.
- Use a post-inspection credit strategy. Instead of canceling, request a seller credit or repair allowance after inspection if issues arise.
- Clarify dispute steps. You can negotiate provisions that require a mutual release or mediation before forfeiture of funds.
- Be precise on timelines. Define clear inspection, financing, and appraisal dates so everyone knows what to expect.
Protect your deposit from fraud
Wire fraud is a real risk in real estate. Scammers send fake wiring instructions that look legitimate. Protect yourself with a few steps:
- Always verify wiring instructions by calling the title company at a known, trusted phone number. Do not use numbers from an email.
- Confirm account details with two contacts if possible, then send a small test wire only if your escrow holder approves that process.
- Be skeptical of last-minute changes to wiring instructions. Call to confirm before acting.
- Use secure portals when available and avoid sending sensitive data over unsecured email.
Handle disputes the smart way
If a deal cancels and there is disagreement about releasing funds, start with your agent and the escrow holder. Ask for the steps to request a mutual release in writing. Your contract may call for mediation or arbitration. If you believe a licensee mishandled trust funds, you can contact the Tennessee Real Estate Commission. Private contract disputes between buyers and sellers are generally resolved through the processes in your agreement or through the courts.
Franklin buyer checklist
- Decide on your earnest money amount based on price point, competitiveness, and risk tolerance.
- Confirm the escrow holder, payee name, and deposit deadline in your signed contract.
- Keep key contingencies in place unless you fully understand the risk of removing them.
- Set clear, realistic deadlines for inspection, financing, appraisal, and title.
- Deliver funds early and get a written receipt from the escrow holder.
- Verify all wiring instructions with a direct phone call to the title company.
- Track every deadline and send notices in writing before they expire.
- If canceling, follow the contract’s notice rules and request a mutual release promptly.
Work with a local guide
The right guidance can save you time, stress, and money. In Franklin and across Williamson County, you want a team that knows how to structure earnest money, set smart timelines, and protect your position while keeping your offer competitive. If you are planning a move, let us help you craft a clean, confident offer and manage every detail from deposit to closing. Connect with Christian Wilson to talk strategy for your next purchase.
FAQs
What is earnest money in a home purchase?
- It is a good-faith deposit that shows you are serious, held in escrow and credited to you at closing if the sale completes.
How much earnest money is normal in Franklin?
- Many buyers offer about 1 to 3% of the price or $1,000 to $10,000, with higher amounts common for higher-priced homes and competitive situations.
Where is my earnest money held in Tennessee?
- Usually with a title or escrow company, or a broker’s trust account, as specified in your contract.
How fast must I deposit the funds?
- Your contract sets the deadline. Many deals require delivery within a few days of acceptance, so confirm the exact timing in writing.
When do I get my earnest money back?
- If you cancel within valid contingencies and give proper notice, you typically receive it back after both parties sign a release.
What if my financing falls through?
- If a financing contingency applies and you do not receive loan approval by the deadline, you can cancel and request a return of your deposit.
What if the appraisal is low?
- With an appraisal contingency, you may renegotiate or cancel and receive your deposit if you cannot reach a new agreement by the deadline.
How can I avoid wire fraud on my deposit?
- Verify wiring instructions by phone using a trusted number, and be wary of last-minute changes or email-only directions.
Who resolves earnest money disputes in Tennessee?
- Start with your agent and escrow holder for a mutual release. Contracts may require mediation or arbitration; courts handle unresolved disputes.
