Earnest Money In New Hampshire: How It Works

Are you wondering how much earnest money you need to put down on a Hanover home and what happens to it if plans change? You are not alone. Buying in a small, high-demand market like Hanover can feel fast and competitive, especially if you are relocating or buying for the first time. In this guide, you will learn what earnest money is, how it works in New Hampshire, when it is refundable, and how to make a strong offer while protecting your interests. Let’s dive in.

What earnest money is

Earnest money is the good-faith deposit you provide after your offer is accepted. It shows the seller you are serious and ready to move forward. The deposit becomes part of your cash at closing. It is usually credited toward your purchase price or closing costs based on your contract.

Think of it as a commitment backed by dollars. The key is that your purchase and sale agreement controls the amount, who holds the deposit, and the rules for refund or forfeiture.

How much to offer in Hanover

There is no single “right” number for Hanover. In many U.S. markets, buyers use a percentage of the price or a flat amount, and the same general idea applies here. What changes in Hanover is the competitive context. Hanover has limited inventory and strong demand connected to local employers such as Dartmouth College, so offers can be more competitive than in slower markets.

A practical approach is to set your deposit based on the property’s price point, the condition of the home, and whether multiple offers are likely. You can choose a flat amount or a percentage. Ask your local buyer’s agent for up-to-date norms in your specific neighborhood and price bracket so you can match the market without overreaching.

Who holds your deposit in New Hampshire

Your contract should name who will hold your earnest money and where. In New Hampshire, common holders include:

• A listing broker’s trust or escrow account
• A buyer’s or seller’s attorney’s escrow account
• A title or closing company escrow account

Good habits help protect you:

• Confirm the escrow holder and keep their contact details.
• Get a written receipt or bank confirmation that funds are in a trust or escrow account.
• Verify how any interest is handled. Many broker trust accounts do not pay interest to buyers. Your contract controls the details.

When it is refundable vs. nonrefundable

The refund status of your deposit depends on the contract and timing. The most important factor is whether you act within your contingency periods and follow the notice rules.

When it is typically refundable

• You cancel within the inspection, financing, appraisal, title, or document review contingency window as your contract permits.
• You and the seller sign a mutual written release.
• The seller cannot cure a title issue within the time allowed and you cancel per the title clause.

When it can become nonrefundable

• You waive contingencies in writing and later cancel for reasons not protected by the contract.
• You miss contingency deadlines, which can remove your protections.
• You default under the contract. Many agreements include liquidated damages provisions that allow the seller to keep the deposit if the buyer breaches. Enforceability depends on the contract and state law.

If there is a dispute

If the parties disagree about who should receive the deposit, funds may sit in escrow until there is a mutual release or a resolution through mediation, arbitration, or a court order. Because legal costs can exceed the deposit, many parties negotiate a settlement. The contract’s dispute terms control the process.

Contingencies that protect you

Contingencies give you time to verify the property and your financing. If you cancel within those windows and follow the contract’s notice steps, your earnest money is usually protected.

Inspection contingency

You review the home for structural, mechanical, pest, or other material issues. You can request repairs or credits, or you can cancel if the contract allows. If you cancel within the inspection period and follow notice requirements, the deposit is typically refunded.

Financing or mortgage contingency

If you cannot obtain loan approval within the deadline, and you provide the required lender documentation, you can usually cancel and keep your deposit. Pre-approval before you offer strengthens both your position and your timing.

Appraisal contingency

If the appraisal comes in below the purchase price, this clause allows you to renegotiate or cancel per your contract. If negotiations fail and you cancel within the deadline, your earnest money is commonly returned.

Title contingency

You or your attorney review the title report. If there are defects and the seller cannot cure them in time, you may cancel and preserve your deposit.

HOA or document review

For properties in associations, you review bylaws and financials. If the documents are not acceptable per your contract standards and timing, you may cancel and receive a refund.

Sale-of-home contingency

This protects you if you must sell your current home first. In seller-favored markets, these can be less competitive, so discuss strategy with your agent.

Timing matters

Most contracts use short, strict windows for inspections and financing. Missing a deadline can remove your protections and put your deposit at risk. Track every date and send notices in writing per the contract.

Making a competitive Hanover offer without needless risk

You can write a strong offer and still protect your deposit. Here is a balanced approach for Hanover’s competitive landscape:

• Get a lender pre-approval and gather supporting documents before you shop. This helps you meet financing deadlines.
• Use a deposit that reflects local norms for the price point and competition level.
• Keep critical protections. Consider shorter but realistic inspection and financing windows instead of waiving them outright.
• Schedule your inspection as soon as the contract is signed so you can meet the timeline.
• If you consider waiving a contingency, talk with your agent and, if needed, a New Hampshire real estate attorney about limited alternatives, such as requesting credits or price adjustments rather than a full waiver.
• Use escalation clauses with care and professional guidance. They can change seller expectations about deposit size and timelines.
• If you are relocating, coordinate with a local closing attorney and your agent early so escrow handling, title review, and timing are clear.

Step-by-step: how earnest money moves from offer to closing

1. Offer accepted

• Your signed purchase and sale agreement names the deposit amount, holder, and deadlines.

2. Deposit delivered

• You send the funds to the agreed escrow holder and obtain a written receipt.

3. Contingency period

• You complete inspections, submit lender documents, order the appraisal if required, and review title and any association documents.

4. Decisions and notices

• You negotiate repairs or credits. If needed, you send written notices to cancel or extend within the deadlines.

5. Clear to close

• If all contingencies are satisfied or waived, your deposit is applied to your purchase price or closing costs at settlement.

6. If plans change

• If you cancel within a valid contingency and follow the contract’s procedures, the escrow agent typically releases the deposit back to you once both parties sign the release, or as the contract directs.

Hypothetical examples

• Inspection outcome: You find roof and foundation issues during the inspection period. You request repairs. The seller declines. You cancel within the inspection window using the proper notice. Your deposit is refunded per the contract.

• Financing denial: Your lender issues a denial despite your good-faith efforts. You deliver the denial letter within the financing contingency timeline. Your deposit is returned.

• Missed deadline: You plan to negotiate repairs but forget to send written notice before the inspection deadline. You try to cancel afterward. Because you missed the deadline, your protection may be gone and your earnest money could be at risk.

• Buyer default: You waive contingencies to compete, then decide not to close for personal reasons. If the contract contains a liquidated damages clause, the seller may be entitled to the deposit.

Local next steps for Hanover buyers

• Ask your agent for recent examples of deposit sizes for homes like the one you want. This helps you calibrate a competitive number.
• Confirm in writing who holds your deposit and how to contact them.
• Build a timeline for inspection, financing, appraisal, title review, and document review. Put every deadline on your calendar.
• Consider an attorney review, especially if you are weighing a contingency waiver or moving a large deposit.
• If you are relocating, coordinate your current home sale, moving dates, and closing with your agent and local closing attorney so your deposit and deadlines stay on track.

Buying in Hanover is fast-paced, but you can compete with confidence. With the right deposit strategy, clear contingency planning, and strong local guidance, you will protect your earnest money and move toward closing with fewer surprises.

Ready to plan a smart offer strategy for Hanover or the Upper Valley? Connect with Lori Shipulski for local guidance, buyer representation, and a clear path from offer to closing.

FAQs

What is earnest money in New Hampshire home purchases?

• It is a good-faith deposit you provide after an accepted offer that shows commitment and is credited to you at closing per the contract.

How much earnest money should I offer in Hanover, NH?

• There is no single rule. Match local norms for your price point and competition level by asking your agent for recent comparable transactions.

Who holds the earnest money in New Hampshire?

• Common holders include a listing broker’s trust account, an attorney’s escrow account, or a title or closing company escrow account as stated in your contract.

When can I get my earnest money back after an inspection?

• If your inspection contingency allows cancellation and you send proper notice within the deadline, the deposit is typically refunded.

Will I lose my deposit if I miss a contingency deadline?

• You might. Missing deadlines can remove protections and put your earnest money at risk, so track dates and send notices on time.

Is my earnest money applied to my down payment at closing?

• Yes. It is generally credited to your purchase price or closing costs, as your contract specifies.