You put your heart into finding the right place. You should be just as confident about how your earnest money works. If you are buying in Central Minneapolis, understanding the deposit, its timelines, and when it is refundable can help you write a stronger offer and protect your budget. In this guide, you will learn the typical amounts, how the Minnesota purchase agreement handles deadlines and contingencies, and the condo-specific details that often shape downtown deals. Let’s dive in.

What earnest money is

Earnest money is your good-faith deposit that shows a seller you are serious about buying. It is part of your funds to close and is applied to your purchase price or closing costs if the transaction completes. The purchase agreement and escrow instructions govern who holds the money, how it is handled, and when it is released.

In Minnesota, the escrow holder is typically a title company, an attorney, or a real estate broker’s trust account. The Minnesota Realtors standard Residential Purchase Agreement lets you and the seller name the holder and set timing in the contract. Your job is to follow those instructions exactly.

How much to offer in Minneapolis

Typical ranges

There is no set percentage in Minnesota. In practice, buyers commonly see:

• Modest or typical offers: $1,000 to 3% of the price
• Competitive downtown or condo offers: 2% to 5% or higher
• Lower-price properties: flat sums like $500 to $2,500

The right number depends on price, property type, and how competitive the listing is. In hotter Central Minneapolis segments, a larger deposit can strengthen your offer.

What influences deposit size

• Market conditions. Downtown condos and certain neighborhoods can be more competitive.
• Property type. Condos often attract investors and cash buyers, which can push deposits higher.
• Financing. Conventional, FHA, or VA financing can shape seller comfort but usually does not set the deposit amount.
• Seller expectations. Some sellers ask for higher earnest money in listing remarks.
• Offer structure. You can trade a higher deposit for other terms like timing or price, but know your risk.

When earnest money is due

Your signed purchase agreement sets the deadline and the escrow holder. Common practice is delivery within 24 to 72 hours after acceptance. Your contract may be different, so check the exact window you negotiated.

Send funds the way the escrow holder requires and keep proof of delivery. Late delivery can put you in default under the contract.

Contingencies that protect your deposit

The Minnesota Realtors purchase agreement includes contingency deadlines that you negotiate up front. These timelines are common but can vary.

• Inspection period: often 7 to 10 days, sometimes up to 14 days for complex inspections or condos.
• Financing or loan commitment: typically 21 to 45 days based on lender and loan type.
• Appraisal timing: often tied to financing or set at 10 to 21 days.
• Title review: the contract may give you a specific window to review exceptions.
• Closing date: negotiated by the parties.

If you cancel within a contingency window as the contract allows, your earnest money is typically refundable. Always deliver notices in writing and on time as the contract requires.

When refunds and disputes happen in Minnesota

When you can get a refund

If you terminate under a covered contingency and meet all notice deadlines, the escrow holder typically releases your deposit back to you. Make sure the termination notice follows the contract language and that you have documentation such as inspection reports, lender updates, or appraisal results.

If a seller claims default

Many Minnesota purchase agreements allow the seller, if the buyer defaults, to retain the earnest money as liquidated damages or pursue other remedies. Whether that is the only remedy depends on your contract. Understand this before you remove protections or miss deadlines.

How disputes get resolved

If you and the seller disagree about who gets the funds, common paths include a mutual signed release, mediation or arbitration if the contract requires it, or a court process such as interpleader. Title companies often need written joint instructions or a court order to disburse disputed funds. These matters can take weeks or months, so prevention is your best strategy.

Condo specifics in Central Minneapolis

Downtown transactions often involve homeowners association rules and resale documents. Give yourself enough time to review the resale certificate, association financials, and any notices about assessments or litigation. Significant association issues can affect value or loan approval.

When you write your offer, consider a clear condo document review contingency with a realistic timeline so you can cancel and recover your deposit if the documents reveal material concerns, as allowed by your contract.

How to structure your deposit

You can tailor your deposit to balance strength and protection. Here are common approaches:

• Moderate deposit with full protections. Pair a typical amount with standard inspection, financing, and appraisal timelines. Good for first-time or cautious buyers.
• Larger deposit to compete. Increase earnest money and tighten timelines to stand out, especially for well-priced condos. Be sure you can meet the deadlines you promise.
• Two-step deposit. Offer a smaller initial amount upon acceptance, then a larger second amount a few days later. This shows commitment while giving you brief liquidity. Put all amounts and dates in the contract.

Whatever you choose, confirm the escrow holder in your offer, know their deposit procedures, and save your wire or check confirmation.

Lender considerations you should expect

Your lender will verify your earnest money as part of your funds to close. Be prepared to document the source of the deposit and provide statements that show the money leaving your account. If funds are a gift, your lender will guide you on acceptable documentation.

FHA and VA loans may have program-specific appraisal and timing requirements. Coordinate your contingency dates with your lender at the offer stage.

A quick buyer checklist

• Confirm the escrow holder and deposit method in your signed offer.
• Calendar every deadline: deposit, inspection, appraisal, loan commitment, and closing.
• Keep copies of inspection reports, lender updates, and all notices.
• Send termination notices in writing and on time if you need to cancel under a contingency.
• Review condo resale documents thoroughly if you are buying a downtown unit.

Common mistakes to avoid

• Sending your deposit late or to the wrong party. This can trigger default.
• Waiving inspection or appraisal protections without understanding the risk to your deposit.
• Shortening timelines beyond what your lender or inspector can meet.
• Skimming condo documents instead of a full review.

What happens at closing

If you complete the purchase, your earnest money is credited toward your price or closing costs on your settlement statement. If you negotiated any split deposits, both amounts roll into your funds due at closing. Keep your final closing disclosure and receipt for your records.

The bottom line for Central Minneapolis buyers

In a competitive urban market, earnest money can help your offer rise to the top. Size it to match the property and the competition, protect it with clear contingency windows, and follow your contract precisely. With the right plan, you can signal strength without sacrificing smart safeguards.

If you want help calibrating deposit amounts, structuring timelines, or navigating condo nuances, connect with the neighborhood-focused team that manages these details every day. Reach out to Regan + Hornig to talk through your goals and craft a winning, well-protected offer.

FAQs

What is earnest money in a Minnesota home purchase?

• It is a good-faith deposit that shows commitment to buy and is applied to your price or closing costs if the deal closes, per your purchase agreement and escrow instructions.

How much earnest money do buyers need in Central Minneapolis?

• Typical practice ranges from $1,000 to 3% of price, with 2% to 5% common for competitive downtown condos. The amount depends on price, property type, and demand.

When is earnest money due after offer acceptance?

• Your contract sets the deadline. Common practice is 24 to 72 hours after acceptance, but you must follow the exact timing in your signed agreement.

When can a buyer get their earnest money back in Minnesota?

• If you cancel within a contract contingency window and deliver proper written notice on time, the deposit is typically refundable through the escrow holder.

Can a seller keep my earnest money if I default?

• Many contracts allow the seller to retain the deposit as liquidated damages if the buyer defaults. Whether that is the only remedy depends on your agreement.

Who holds earnest money in Minneapolis transactions?

• Usually a title company, attorney, or broker trust account named in the purchase agreement. Pick a reputable escrow holder and confirm deposit procedures.