Earnest money is the deposit you put down to show a seller you are serious, and in a Massachusetts purchase it comes in two parts: a small deposit with the offer, commonly around $1,000, and a larger deposit when you sign the purchase and sale agreement, bringing the combined total to about 5 percent of the price. It is credited toward your purchase at closing, and understanding when it is safe and when it is at risk is basic buyer literacy.
Who Holds It and Where It Goes
Your deposits are held in escrow, typically by the seller's brokerage or the closing attorney, in a regulated account, and they are applied to your down payment and costs at closing. They are not the seller's money to spend during the transaction. If the deal closes, you never see them separately again, because they are already inside the purchase. If the deal fails, who keeps them depends entirely on why it failed and what the contract says.
When Your Deposit Is Protected
Your contingencies are the shield. If you withdraw within your inspection contingency because the inspection revealed problems, or your financing falls through inside a properly written mortgage contingency, your deposits are generally returned under the contract's terms. The protection lives in the deadlines: miss the inspection date or the commitment date without an extension, and the same deposit that was safe becomes exposed. Calendar discipline is deposit protection.
When It Is at Risk
If you simply change your mind outside any contingency, or default on the purchase, the seller's remedy under most Massachusetts contracts is to keep the deposits as liquidated damages. That is the point of earnest money: it gives your promise a cost. It is also why waiving contingencies to win a Townsend bidding war should never be done casually. Waiving the inspection contingency does not just risk repair bills. Paired with a financing failure, it can put the full deposit in play.
Treat the deposit schedule as part of the offer strategy, because sellers do. A buyer who can bring the purchase and sale deposit promptly and in full looks like a buyer who closes. And treat the contingency deadlines as the most important dates in your transaction, because they are literally the dates your money is protected until. Your agent and attorney should both be tracking them out loud, in writing, from the day the offer is accepted.
If you want the deposit schedule and contingency dates explained before you sign anything on a Townsend purchase, call Doherty Properties at (978) 746-0124 and ask for me, Chris Doherty.
Chris Doherty is the #1 selling agent in Lowell, ranked #1 in the city again and again, including in 2024 and 2025, and he is one of Greater Lowell's top-producing agents. He personally sells 100+ homes a year, with 3,000+ career transactions, and Doherty Properties, the company he leads, has handled over $1 billion in real estate transactions.
Doherty Properties LLC, 14 Jackson Street, Lowell, MA 01852 | 160 Main Street, Unit 7, Haverhill, MA 01830 | 4 Courthouse Lane, Suite 2, Chelmsford, MA 01824 | (978) 746-0124 | [email protected]
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