Buying or selling in Overland Park and not sure how earnest money works? You’re not alone. This small deposit plays a big role in getting a contract accepted and keeping both sides protected while the deal moves forward. In a few minutes, you’ll understand what earnest money is, how much is typical locally, when it’s refundable, and how to avoid costly mistakes. Let’s dive in.
What earnest money is
Earnest money is a good-faith deposit you submit with your offer to show you’re serious. In return, the seller takes the home off active marketing while both sides work through inspections, appraisal, and financing. If the sale closes, your deposit is credited toward your down payment and closing costs. If the contract allows for cancellation, it can be refunded.
How it works in Overland Park
Who holds the deposit
In Overland Park and across Johnson County, the deposit is usually held by a neutral third party. Most often, that means a title or escrow company, or sometimes a real estate brokerage’s trust account in compliance with Kansas rules. It’s uncommon for a seller to hold the funds directly. Your purchase agreement will name the escrow holder and spell out how the money will be handled.
When to deliver it
Standard contracts used by local REALTORS typically require delivery within a short window after the seller accepts your offer. You will often see deadlines of 24 to 72 hours, but the contract controls. Confirm the due date in writing and ask the escrow holder for a receipt as soon as funds are deposited. Keeping clear records helps if questions come up later.
How much to offer
There is no single rule for amount. Local patterns in Johnson County often look like this:
- Lower-priced homes or softer markets: flat amounts around $1,000 to $3,000 can be common.
- Mid-priced homes: many buyers offer about 1 to 2 percent of the purchase price.
- Competitive or luxury listings: 2 to 5 percent (or more) can strengthen an offer, but increases risk if you later default.
The right number depends on the property and current market conditions in Overland Park. A stronger deposit can help you stand out, especially with multiple offers, but you should balance that with safeguard contingencies.
When it’s applied or refunded
If the sale closes, the escrow holder applies your deposit to what you owe at closing. If you cancel under a valid contingency and within the deadline, the deposit is typically refundable. If you default without a contractual right to cancel, the seller may have remedies that include keeping the deposit as liquidated damages, if your contract includes that remedy.
Key timelines to track
Every contract is different, but here are common timelines you will see in Johnson County transactions:
- Earnest money due: usually within 24 to 72 hours after acceptance, per contract.
- Inspection period: often 7 to 14 days to complete inspections and request repairs.
- Financing/loan commitment: commonly 21 to 30 days to secure approval.
- Appraisal: scheduled early to meet financing deadlines.
- Closing: many deals close 30 to 45 days from acceptance, depending on lender and title schedules.
Always follow the dates in your signed agreement. If you need more time, request an extension in writing before a deadline expires.
Protect your deposit with contingencies
Common buyer protections
Contingencies outline specific reasons you can cancel and receive a refund of earnest money. Common protections include:
- Home inspection contingency
- Financing contingency
- Appraisal contingency
- Title and survey contingency
- Other negotiated items, such as sale-of-home or HOA document review
When it’s refundable
Your earnest money is usually refundable if you cancel within the agreed period under a stated contingency. If the seller materially breaches the contract, you may also be entitled to a refund and other remedies. The steps and deadlines in your contract control how notice must be given.
When you could forfeit it
If you miss a deadline and then cancel, or if you fail to close without a contractual right to do so, the seller may claim your deposit. Many standardized Kansas purchase forms include a liquidated damages clause that can allow the seller to retain the earnest money after a buyer default. Read this section closely with your agent and, if needed, a real estate attorney.
Resolving disputes
Escrow holders follow the contract. If both parties agree, a mutual release is the cleanest way to have funds disbursed. If there is a disagreement, the escrow holder will typically hold the money until both sides sign a release or a court orders distribution. Some contracts provide for mediation or arbitration. Keep communication in writing and save all receipts and notices.
Kansas and Johnson County basics
Kansas oversight and standard practice help protect the handling of client funds. The Kansas Real Estate Commission sets rules for broker trust accounts, and local REALTOR associations provide standardized forms widely used in Johnson County. Title companies and brokers are required to keep earnest money in appropriate trust or escrow accounts and provide accounting. Always ask for a written receipt showing where and when your funds were deposited.
For title matters, the Johnson County Register of Deeds is the official source of recorded documents. If a dispute becomes complex or significant funds are at stake, many buyers and sellers consult a local real estate attorney to understand remedies under Kansas contract law.
Buyer strategies for Overland Park
- Balanced or buyer-leaning markets: You can often use a modest deposit with standard contingencies. Focus on clear deadlines and strong financing documentation.
- Competitive listings: A larger deposit and shorter timelines can strengthen your offer. Preserve key protections like inspection and appraisal, or shorten periods instead of waiving them outright.
- First-time or financed buyers: Keep inspection and financing contingencies in place. Choose a deposit you’re comfortable with, and make your offer stronger through clean terms and responsive timelines.
- Cash buyers: You can pair a substantial deposit with a shorter close to signal certainty, while keeping essential protections.
Seller tips when reviewing offers
- Look beyond the number: A larger deposit is a positive signal, but the structure of contingencies and the buyer’s financing strength matter just as much.
- Verify the deposit: Require proof that earnest money was delivered to the named escrow holder on time.
- Use clear remedies: Understand any liquidated damages clause in the contract and how it applies if a buyer defaults.
- New construction: Builder contracts often have staged or non-refundable deposits for upgrades. Buyers should read deposit and refund language carefully and ask questions in writing.
- FSBO sellers: Use a clear written contract that names an escrow holder, outlines release conditions, and follows local custom. A title company is a practical choice for holding funds.
Step-by-step checklists
Buyers: before you deposit
- Confirm the deposit amount, deadline, and escrow holder in your signed offer.
- Verify the escrow holder’s instructions and request a written receipt immediately after deposit.
- Make sure inspection, financing, and appraisal contingencies and timelines are written into the contract.
- Save copies of all communications, transfers, and receipts.
Buyers: after you deposit
- Track every deadline and take action before they expire.
- If you need to cancel under a contingency, send written notice by the stated method.
- Request the release of earnest money per the contract’s procedures.
Sellers: managing offers and deposits
- Confirm timely delivery of funds to the named escrow holder.
- Evaluate deposit size alongside contingency terms and buyer financing.
- Do not assume funds are non-refundable unless the contract clearly provides that remedy.
If there’s a dispute
- Ask the escrow holder what the contract instructs and whether a mutual release is required.
- Try to resolve issues through negotiation or any mediation/arbitration required by the contract.
- Consult a local real estate attorney if the parties disagree on contract interpretation or if significant funds are at risk.
The bottom line
In Overland Park, earnest money is straightforward when you follow the contract and watch your dates. Choose a deposit that matches the market and your comfort level, keep essential contingencies, and get every milestone in writing. With careful planning, your deposit will do what it’s meant to do: signal commitment and support a smooth path to closing.
If you want a clear strategy for earnest money and a confident plan to win your next Johnson County home, reach out to Trent Gallagher-ReeceNichols for local, concierge-level guidance.
FAQs
How much earnest money is typical in Overland Park?
- There is no fixed rule; many buyers offer a few thousand dollars to about 1 to 2 percent of price for typical homes, and more in competitive or luxury situations.
Who usually holds the earnest money in Johnson County?
- A neutral title or escrow company holds the funds in most cases, or sometimes a brokerage trust account; your contract names the escrow holder.
When do I have to deposit earnest money after my offer is accepted?
- Standard local contracts often require delivery within 24 to 72 hours, but your signed agreement sets the exact deadline.
Is my earnest money refundable if I cancel after inspection?
- Generally yes, if you cancel within the inspection period and follow the contract’s notice procedures; the contract controls timing and process.
Can a seller keep my earnest money if I don’t close?
- Possibly, if you default without a contractual right to cancel and the contract allows the seller to retain the deposit as liquidated damages.
