The escrow deposit is the buyer's money, held by a neutral third party, that shows the offer is real. It is not paid to the seller; it sits with an escrow agent, usually a title company or an attorney, and it is applied to the price at closing. What it is released for, and to whom, is set by the contract.
- Size signals seriousness, and timing signals more. A deposit that goes hard early is a stronger offer than a larger one that never does.
- The escrow agent is neutral and cannot simply hand the money over. A disputed deposit is resolved by the contract's procedure, not by the louder party.
- Read what releases it. Financing, inspection and title are separate outs, and each has its own deadline.
- It is applied at closing, not additional to the price. Buyers new to the market ask this more often than anyone expects.
A purchase at $1,599,500 with an initial deposit of 3% and a second deposit of the same size at the end of the inspection period.
After that date the deposit is exposure, not a gesture. Here it is worth a full year of the building's net operating income.
Related terms
All termsEffective Date
The effective date is the day a contract becomes binding: when the last party signs or initials the final offer and that signed contract is delivered back.
ClosingInspection Period
The inspection period is the window after the effective date in which the buyer investigates the property and can cancel.
ClosingTitle Commitment
A title commitment is the title insurer's written statement of the policy it will issue, and on what conditions.
Terms arrive with the writing.
The glossary grows as the Journal does, one email when something worth reading goes up. No noise.
Unsubscribe anytime. See our Privacy Policy.