What Is Earnest Money in Minnesota? Edina Buyer Guide

If you are getting ready to write an offer in Edina, you have likely heard about earnest money. You want to show a seller you are serious, but you may also wonder how much to put down and what happens if plans change. This guide breaks down how earnest money works in Minnesota, what is typical in Edina, how your deposit is protected, and the steps to keep it safe. Let’s dive in.

Earnest money basics in Minnesota

Earnest money is a buyer’s deposit that accompanies an accepted purchase agreement. It shows good faith and helps secure your offer. In Minnesota, it is a contractual deposit, not a state fee or tax.

Minnesota law does not require earnest money, but it is standard practice and most sellers expect it. The purchase agreement sets the amount, the timeline for delivery, and the conditions for refund. In our area, buyers and sellers often use a Minnesota REALTORS form, and the exact contract language controls the outcome.

At closing, your earnest money is credited toward your down payment or your closing costs. Think of it as part of the cash you already plan to bring to closing, not an extra cost.

How much earnest money in Edina

Across Minnesota, a common range is about 1 to 3 percent of the purchase price in typical conditions. Buyers sometimes use smaller flat amounts on lower priced homes or when testing the waters. In hotter conditions or at higher price points, larger sums are common to stand out.

Edina is a higher priced Hennepin County market, so deposits often scale up with price and competition. Here are simple illustrations to help you frame your offer:

$400,000 home: 1 percent equals $4,000. 2 percent equals $8,000.
$700,000 home: 1 percent equals $7,000. 2 percent equals $14,000.
For multimillion dollar homes, buyers often choose a larger flat amount to match seller expectations.

If a listing is very competitive, some buyers increase earnest money or shorten certain timelines to strengthen their offer. Always weigh the signal you want to send against the risk you can accept.

Factors to set your amount

Price point and local competition in Edina.
Days on market and any price reductions.
Whether the seller has multiple offers or a deadline.
Your comfort with the contract’s contingencies and timelines.
Guidance from your agent based on recent comparable sales.

Where your deposit is held

Earnest money is placed in an escrow or trust account until closing. In Minnesota, that is often a real estate broker’s trust account or the title and closing company’s escrow account, as instructed in the purchase agreement.

Brokers must place client funds in proper trust accounts and avoid commingling with operating funds. Title and escrow companies follow written escrow instructions and release funds only according to the contract or a written agreement of the parties.

You will usually deliver funds by personal check, cashier’s check, or wire transfer. Always verify wiring details by calling a trusted, verified phone number before you send any money. Wire fraud schemes target real estate deposits, and a quick call can protect you.

Timelines that matter

Your purchase agreement will state exactly when your earnest money is due. Common practice is delivery with the offer or within 1 to 3 business days after acceptance. Follow your contract, not a rule of thumb.

Other key timelines that affect your deposit include your inspection period, loan commitment date, appraisal timing, and any title review deadlines. Many inspection windows run about 3 to 10 days, and financing periods often run about 21 to 30 days, but every contract can differ.

Set calendar reminders for each deadline and know how to deliver notice in writing if you need to cancel under a contingency. Timely written notice is what protects your deposit.

Contingencies that protect your deposit

Contingencies are contract conditions that let you cancel and recover your earnest money when used properly and on time. Common examples include:

Inspection contingency. You may inspect and either negotiate repairs or cancel within the timeframe if you are not satisfied.
Financing contingency. If your mortgage is not approved within the set period, you can usually cancel and recover your deposit.
Appraisal contingency. If the appraisal comes in below the purchase price and you cannot reach a new agreement, you may be able to cancel.
Title or marketable title contingency. If the seller cannot deliver marketable title, you can typically cancel and recover funds.
Sale of buyer’s home contingency. This exists but is less common in competitive Edina listings.

If you meet all deadlines and properly exercise a contingency, you generally receive a full refund of earnest money. If you waive or miss a contingency, your protection can be limited.

When you might lose your deposit

If you remove contingencies in writing or let them lapse, then later default, the seller may be entitled to keep your earnest money as liquidated damages and possibly seek additional remedies. The contract governs what happens, so read the clauses on default and damages carefully.

If a seller breaches the agreement, such as failing to convey marketable title, you may be entitled to return of your deposit and other remedies available under the contract.

If there is a dispute

When the buyer and seller disagree about who should receive the earnest money, the escrow holder will often retain the funds until both parties deliver written instructions or a court order or an arbitration or mediation outcome directs disbursement. Many Minnesota purchase agreements include dispute resolution provisions and allow the escrow holder to interplead the funds with a court when there are competing claims.

How it appears at closing

On your Closing Disclosure, the earnest money shows as a credit to you. It reduces what you need to bring to closing for your down payment and closing costs. If the deposit exceeds what is needed, any excess is returned to you under the closing instructions.

Smart steps before you offer in Edina

Use this quick checklist to keep your deposit safe and your offer strong:

Ask your agent about typical earnest money amounts for similar Edina homes right now.
Confirm the exact amount, payee, and where to deliver funds in your purchase agreement.
Know your delivery deadline and set reminders immediately after acceptance.
Track each contingency deadline and how to deliver written notice if needed.
Coordinate with your lender early so loan and appraisal timelines fit your contract.
Prefer a wire to the named escrow or title company when instructed, but always verify wiring instructions by phone to a known number before sending.
Get a written receipt when the escrow holder receives your deposit.
If you consider waiving or shortening contingencies to compete, understand the increased risk to your deposit.

Edina offer scenarios to consider

Mid range single family purchase. You offer on a well kept Edina home at 650,000 with a 2 percent earnest deposit, standard inspection and financing contingencies, and on time deadlines. Your deposit signals seriousness without undue risk because your protections are clear.
Multiple offer, in demand listing. A new listing has many showings and an offer deadline. You increase your deposit above 3 percent and shorten the inspection window to be more competitive. You keep financing and appraisal protection. Your stronger deposit helps your offer stand out while you still protect your funds under key contingencies.
Upper tier or luxury property. On a 1.8 million dollar home, you choose a larger flat deposit that aligns with seller expectations and current local practice for that segment. You confirm all timelines with your lender on day one so the financing and appraisal dates are realistic, which helps keep your deposit safe.

In every scenario, the written purchase agreement controls the amount, deadlines, and outcomes, so your strategy should match both the property and the terms.

Work with a local guide

Earnest money is simple once you know the rules, but the details matter in Edina where price points and competition can vary by neighborhood and season. You deserve a steady hand to help you size your deposit, structure your contingencies, verify delivery, and keep every deadline on track.

If you want clear, local guidance from a team that has helped Edina buyers since the late 1980s, reach out to Steve Schmitz. We are here to answer questions, tailor a plan to your goals, and help you move with confidence.

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