Are you getting ready to make an offer on a Hobart home and wondering how earnest money works? You are not alone. That deposit can help your offer stand out, but you also want to keep it safe. In this guide, you will learn what earnest money is, how much buyers in Hobart often put down, how escrow works in Lake County, and the contract terms that protect your funds. You will also get a simple checklist you can use before you send a single dollar. Let’s dive in.
What earnest money means in Indiana
Earnest money is a good‑faith deposit you include with your offer to buy a home. It shows a seller you are serious. The funds are not the purchase price. They are held temporarily in escrow until closing or until the contract says they can be released.
The deposit gives a seller some protection if a buyer walks away without a contractual right to cancel. In competitive situations, a solid deposit can help your offer get noticed. In a slower market, you can often keep the deposit modest while leaning on strong contingencies for protection.
How much earnest money in Hobart
There is no fixed amount set by law in Indiana. Local practice in Hobart and across Lake County varies by price point and competition. Buyers commonly offer:
- A flat amount for lower‑priced or entry‑level homes, often from a few hundred dollars to a few thousand dollars. Amounts like 500 to 2,500 dollars are common in many Midwestern markets.
- A percentage of the purchase price when competition is stronger, sometimes a few percent to signal commitment.
What should you choose? Consider three factors:
- Your target price and how competitive the listing is.
- How quickly homes are selling and whether there are multiple offers.
- The strength of the contingencies in your offer. Strong protection often pairs with a reasonable deposit.
Talk with your local buyer’s agent about recent accepted offers in Hobart. They can help you match today’s norms without putting more at risk than necessary.
Where your money goes in Lake County
In Hobart, earnest money is typically delivered to and held by the title company that will handle closing. Sometimes the listing broker’s escrow account holds the funds instead. The purchase agreement will name the escrow holder.
Escrow holders must follow the written contract and escrow instructions. They generally should not release funds unless the contract says to do so, both parties sign a mutual release, or a court orders the release.
Deposit timing and delivery
Your purchase agreement will include a deadline for delivering the deposit. Many contracts call for delivery within a short window, such as 24 to 72 hours after acceptance. Make sure the deadline and delivery method are written into the offer and follow them exactly.
Use a traceable method, like a wire transfer to the title company’s escrow trust account or a check payable to the named escrow holder. Always get a written receipt that references the property, the contract parties, and the date received.
Contract terms that protect you
The Indiana Association of REALTORS purchase agreement and local MLS forms typically include clear terms for earnest money. Key protections include:
- Inspection contingency. Lets you inspect, request repairs or credits, or cancel within the inspection period and receive your deposit back if you follow the process on time.
- Financing contingency. Protects you if your loan cannot be obtained by the specified date and you give timely notice.
- Appraisal contingency. Covers you if the appraisal comes in low and the contract gives you the right to cancel or renegotiate.
- Title and survey contingencies. Protect you if the title is not clear or a survey reveals an issue.
Also look for remedies language. Many Indiana contracts let a seller keep the earnest money as liquidated damages if a buyer defaults. Whether that clause is enforceable depends on the reasonableness of the amount and the exact wording. Some contracts also allow a seller to seek other remedies. The contract controls, so read it closely and ask questions before signing.
Practical ways to protect your deposit
You can reduce risk without weakening your offer. Use these steps:
- Put all deposit details in writing. Amount, deposit deadline, escrow holder’s name, and delivery method should be in the purchase agreement.
- Stage your deposit. Offer a smaller initial amount at acceptance, then add more after inspections or when contingencies are removed.
- Set realistic deadlines. Give yourself enough time for inspections, appraisal, and final lender approval.
- Define notice rules. State how you will give notice to terminate under a contingency and who must receive the notice.
- Get a receipt right away. Confirm the funds are in an escrow or trust account under the escrow holder’s name.
- Verify wiring instructions by phone. Call the title company using a trusted number to avoid wire fraud.
- Keep records. Save copies of checks, receipts, lender letters, inspection reports, and all correspondence.
Common dispute scenarios and resolutions
Disagreements sometimes happen, especially if a deal falls through near a deadline. Typical scenarios include:
- Cancelling after a contingency expires. The seller may claim a default and ask to keep the deposit.
- Cancelling within a contingency window but not following the notice process accurately. The seller may dispute the return.
- Financing denial late in the process. The seller questions whether the financing contingency was properly exercised.
Most disputes resolve in one of three ways:
- Mutual release. Buyer and seller sign instructions telling escrow how to disburse funds.
- Mediation or arbitration. Many contracts require alternative dispute resolution before court.
- Court action. A judge decides based on the contract language and the evidence.
If a dispute arises, review your contract and contingency dates, coordinate with your agent and the escrow holder, send written notice if appropriate, and follow the dispute‑resolution path in the agreement. Preserve all documentation.
Buyer checklist for Hobart offers
Use this quick checklist before you deliver earnest money:
- Confirm the deposit amount and exact deadline in the contract.
- Name the escrow holder and specify delivery method.
- Include inspection, financing, appraisal, title, and survey contingencies with clear timelines.
- Define how notices must be delivered to exercise a contingency or terminate.
- Consider a staged deposit structure.
- Deliver funds by traceable method and get a receipt that references the contract.
- Verify wiring instructions by phone with the title company.
- Save all records and set calendar reminders for each deadline.
Example strategies for different markets
You can tailor your approach to the property and competition:
- Competitive listing with multiple offers. Offer a stronger deposit, possibly a few percent of the price, but keep all key contingencies. Consider adding an additional deposit when you remove contingencies to show commitment.
- Balanced or slower market. Use a modest flat deposit, such as in the hundreds to low thousands, with standard contingencies and reasonable time frames.
- If financing is tight. Keep the financing contingency intact and set realistic lender milestones. A staged deposit can help you compete while limiting early risk.
Escrow and wire safety basics
Protect your funds from the start:
- Never send a wire based on emailed instructions without calling the title company at a known phone number to confirm.
- Make checks payable to the named escrow holder, not an individual.
- Ask for a receipt that lists the escrow or trust account name and the date received.
- Do not hand over cash without a written acknowledgement and contract reference.
Work with a local guide
A well‑written offer does more than set price. It sets the rules for your deposit and your protection. A local Hobart agent can help you pick the right earnest money amount, build in the right contingencies, track deadlines, and avoid missteps that put your funds at risk.
If you want help crafting a strong, safe offer in Hobart or anywhere in Lake County, reach out to Favela Real Estate. Our team blends local market knowledge with hands‑on transaction experience so you can move forward with confidence.
FAQs
How does earnest money work for Hobart homebuyers?
- It is a good‑faith deposit held in escrow under your purchase agreement. If you close, it applies to your costs. If you cancel under a valid contingency on time, it should be returned.
How much earnest money should I offer in Hobart?
- Match local practice and competition. Many buyers use a flat amount in the hundreds to a few thousand dollars, or a few percent of price when competition is strong.
Who holds earnest money in Lake County, Indiana?
- Usually the title company that will close the deal, or sometimes the listing broker’s escrow account, as specified in your contract.
When is earnest money refundable to the buyer?
- When you properly exercise a contingency, such as inspection, financing, appraisal, title, or survey, within the deadlines and notice rules in your agreement.
Can a seller keep my earnest money if I back out?
- Possibly, if you default and the contract allows the seller to keep the deposit as liquidated damages or pursue other remedies. The contract controls the outcome.
How do I avoid wire fraud when sending earnest money?
- Call the title company at a trusted number to confirm wiring instructions, use secure delivery methods, and get a written receipt that references your contract.
