Making an offer on a Franklin home can feel exciting and a bit nerve‑racking, especially when you write that first check. You want your offer to stand out, but you also want to protect your money if something goes off track. In this guide, you’ll learn exactly how earnest money works in Massachusetts, what’s typical in Franklin, when deposits are refundable, and how to keep your funds safe. Let’s dive in.
What earnest money is
Earnest money, sometimes called the deposit or good‑faith deposit, is money you put down when your offer is accepted and the purchase and sale agreement is signed. It shows the seller you are serious and gives them some security if you default. At closing, your deposit is usually credited toward your down payment or closing costs.
Earnest money is a normal part of buying a home in Massachusetts. The key is understanding how your purchase and sale (P&S) agreement handles the deposit, because that document controls refund rights and deadlines.
How a Massachusetts P&S handles deposits
Most Massachusetts transactions use standardized P&S forms that spell out your deposit amount, when it is due, who holds it, and which contingencies allow a refund. You will often see language noting the funds are held in a trust or escrow account and credited to you at closing.
Many P&S agreements include a liquidated damages clause. This can allow the seller to keep your deposit if you breach the contract and you do not have a contingency to cancel. Other forms allow the seller to pursue additional remedies. The exact wording matters, so have your attorney review it.
Who holds your funds
In Massachusetts, deposits are commonly held in an escrow or trust account by the seller’s attorney, the listing broker, or a title/escrow company. Your P&S should identify the escrow holder by name. Always get a written receipt for the amount, date, and who is holding the funds.
How much to put down in Franklin
Deposit size is a strategy. It should match price point and market conditions.
- In many suburban Massachusetts markets, a typical deposit is 1 to 3 percent of the purchase price.
- For some lower‑price deals, buyers use a flat $1,000 to $5,000. For higher‑priced homes or competitive situations, 2 to 3 percent is common.
- Examples: On a $400,000 home, 1 percent is $4,000 and 2 percent is $8,000. On a $600,000 home, 1 percent is $6,000 and 2 percent is $12,000.
In a competitive Franklin or I‑495 corridor market, a larger deposit can help your offer stand out. In a more balanced market, 1 to 2 percent is often sufficient. Ask your local agent for what is typical for the specific neighborhood and price point you are targeting.
Contingencies that protect your deposit
Your P&S will include contingencies and deadlines. If you follow the terms and cancel within the allowed window, your deposit is typically refundable.
Inspection contingency
Most buyers receive a set number of days after signing to complete a home inspection and either negotiate or cancel. In Massachusetts, this window is often 7 to 10 days but is negotiable. If you cancel in writing within the period, your deposit is typically refundable.
Financing contingency
If you are getting a mortgage, the P&S usually includes a financing or mortgage commitment deadline, often 21 to 45 days depending on your lender and what you negotiate. If you cannot secure financing and provide notice as required, you can typically cancel and receive your deposit back.
Appraisal contingency
If the property appraises below the contract price, an appraisal clause may allow you to renegotiate, pay the difference, or cancel. If you cancel per the clause within the deadline, your deposit is usually refundable.
Title contingency
If title defects are discovered and cannot be cured in a reasonable time, a title clause may allow you to terminate and recover your deposit.
Condo document review
For condos, you often get several days to review association documents. If you cancel within the stated period per the clause, your deposit is typically refunded.
Sale‑of‑home contingency
If your purchase depends on selling another property, a sale contingency can protect you when properly drafted and followed.
Timeline you can expect
Exact dates are set in your P&S, but here is what buyers in the Franklin area commonly see:
- Initial deposit: delivered at signing or within 3 to 5 business days of acceptance.
- Additional deposit: sometimes due after a milestone, like the mortgage commitment date.
- Inspection period: often 7 to 10 days from acceptance or P&S signing.
- Mortgage commitment: often 21 to 45 days.
- Closing: often 30 to 60 days from P&S signing.
Your timeline should reflect your lender’s speed, the property type, and local competition. When you see “time is of the essence” in a clause, it means the deadline is strict.
When deposits are refunded
Your deposit is typically refundable if you:
- Cancel within the inspection period according to the contract.
- Fail to obtain financing and give written notice by the financing deadline.
- Invoke an appraisal clause within the time allowed.
- Terminate because of uncured title issues per the P&S.
- Cancel within the allowed condo document review period.
Follow the notice requirements exactly and keep documentation, such as an inspection report or lender denial letter. Written, timely notice is critical to protect refund rights.
When deposits can be forfeited
You risk losing your deposit if you walk away without an applicable contingency or miss a deadline. If your P&S includes a liquidated damages clause and you default, the seller may keep the deposit as the sole remedy. If it does not, the seller may also pursue other remedies, depending on the contract.
If a dispute arises
Sometimes buyers and sellers disagree about who gets the deposit. If that happens, the escrow agent may hold the funds until both parties sign a written release, or may file an interpleader action with the court to let a judge decide. This can delay resolution, so it is best to avoid disputes by meeting deadlines and documenting all notices.
Franklin market tips for deposits
Franklin and nearby commuter towns along the MBTA Franklin Line and the I‑495 corridor can shift between balanced and competitive. Your deposit strategy should fit current conditions.
- Low inventory or multiple offers: consider a larger deposit or cleaner terms, but balance risk with protections.
- Stable conditions: standard deposits of 1 to 2 percent with typical contingencies are common.
- Seasonal shifts: spring often brings more competition and more aggressive terms. Plan your deposit and timelines with your agent and attorney.
Buyer checklist: protect your deposit
- Before you sign:
- Hire a local buyer’s agent and a Massachusetts real estate attorney.
- Decide on a deposit amount based on price, competition, and your comfort level.
- At signing:
- Make the deposit payable to the named escrow holder in the P&S.
- Get a written receipt showing the amount, date, and who is holding funds.
- Confirm refund language, contingency deadlines, and remedies for default.
- During contingencies:
- Schedule inspections immediately and deliver any notices in writing before the deadline.
- Keep lender updates and retain a denial letter if financing falls through.
- If the appraisal is low, act within the appraisal clause timeline.
- If risk arises:
- Keep copies of all notices and emails.
- Contact your attorney quickly if a dispute seems likely.
Keep your funds safe: wire fraud tips
- Always verify wiring instructions by calling the escrow holder or attorney using a known phone number.
- Never rely solely on email for wiring details.
- Consider a cashier’s check or in‑person delivery if you have any doubts.
The bottom line
Treat earnest money as both a show of strength and a responsibility. In Massachusetts, refundability is tied to your contingencies and deadlines, and the written P&S rules the process. With a clear plan, the right team, and precise timing, you can make a strong offer in Franklin while keeping your deposit protected.
If you want a Franklin‑focused strategy for deposit size, timelines, and contingency planning, reach out to Danielle McCarthy Real Estate & Co. for guidance tailored to your goals.
FAQs
What is earnest money for a Massachusetts home purchase?
- Earnest money is a good‑faith deposit you pay when your offer is accepted and the P&S is signed, and it is typically credited to you at closing.
How much earnest money is typical in Franklin, MA?
- In many suburban Massachusetts markets, 1 to 3 percent of the purchase price is common, with 1 to 2 percent typical in balanced conditions.
When is earnest money refundable in Massachusetts?
- It is usually refundable if you cancel within valid contingencies and deadlines, such as inspection, financing, appraisal, title, or condo document review.
Who holds the deposit in a Franklin transaction?
- Deposits are often held in a trust or escrow account by the seller’s attorney, the listing broker, or a title/escrow company named in the P&S.
What happens if the seller defaults on the P&S?
- If a seller wrongfully refuses to sell, you can typically recover your deposit and may seek specific performance or damages depending on the P&S and legal advice.
What if buyer and seller disagree about the deposit?
- The escrow agent may hold the funds until both parties sign a release or may file an interpleader action so a court can decide.
How fast do I need to deliver my deposit in Massachusetts?
- Initial deposits are often due at signing or within 3 to 5 business days of acceptance, with any additional deposits tied to milestones set in the P&S.
