Wondering how much earnest money you need to compete in Hanover without taking on too much risk? If you are relocating to the Upper Valley or buying for the first time, the deposit rules can feel confusing. You want to show a seller you are serious while keeping your money protected. This guide breaks down how earnest money works in Hanover, what amounts are common, when it is refundable, and how to structure a strong, balanced offer. Let’s dive in.
What earnest money is
Earnest money is a good‑faith deposit you include with an accepted offer. It tells the seller you plan to follow through and helps secure the home while you move toward closing. At closing, your earnest money is credited toward your down payment and closing costs. If the contract allows for a refund and you cancel within those terms, the money can be returned to you.
Earnest money plays two roles:
- Market signal: A larger or faster deposit can make your offer more attractive in competitive markets.
- Contract protection: If a buyer or seller breaches the agreement, the contract explains what happens to the deposit.
How much in Hanover
Nationwide, buyers often put down about 1% to 3% of the purchase price as earnest money. In Hanover and nearby Upper Valley towns, limited inventory and strong demand can push deposits toward the higher end of that range.
Here are simple examples to help you picture it:
- $400,000 purchase: 1% is $4,000; 2% is $8,000
- $600,000 purchase: 1% is $6,000; 2% is $12,000
- $900,000 purchase: 1% is $9,000; 2% is $18,000
First‑time buyers or buyers with tighter financing often stay in the 1% to 2% range. Relocating buyers trying to stand out, especially on hot listings, may increase the amount or tighten timelines. Some buyers offer a portion as nonrefundable to win in multiple offers, but that increases risk. Many Hanover buyers use escalation clauses or keep earnest money refundable while strengthening other terms instead.
Who holds it and when you pay
Your contract will say who holds the deposit in escrow. In New Hampshire, the holder is often one of the following:
- The listing broker’s trust or escrow account
- The buyer’s broker trust account
- A closing attorney’s escrow account
- A title or closing company escrow account
Most contracts require you to deliver the earnest money shortly after acceptance, commonly within 24 to 72 hours. Your contract should state the exact deadline and accepted payment types, such as personal check, certified check, or wire.
You should receive written confirmation when the money is received, including who holds it and how it will be applied or released.
Wire transfer caution
Wire transfers are fast, but wire‑fraud scams do happen near closing. Protect yourself by verifying wiring instructions with the escrow holder using a trusted phone number, not a number from an email. Ask for written confirmation once funds arrive. If allowed and practical, certified checks are a conservative alternative.
Refunds, contingencies, and risk
Your contract outlines when earnest money is refundable. Common contingencies that protect your deposit include:
- Home inspection contingency. You can inspect the home within a set time and cancel for a refund if you follow the contract’s notice terms.
- Financing contingency. If your loan is denied within the stated period despite good‑faith efforts, you can cancel and receive your deposit back.
- Appraisal contingency. If the appraisal comes in below the price, you can renegotiate, make up the difference, or cancel under the contingency.
- Title contingency. If title issues cannot be cleared, you can cancel and receive a refund.
- Sale of buyer’s home contingency. Refunds can apply if you cannot sell your current home on time, although this term can be less attractive to sellers.
Situations that can lead to forfeiture include missing a deadline, failing to deliver a required notice, defaulting without a contractual basis, or agreeing up front that some portion is nonrefundable. If there is a dispute over who should receive the escrowed funds, the escrow holder will usually keep the funds in trust until both parties agree in writing or a dispute resolution process is completed.
Protect your refund rights
- Put all contingency periods and notice requirements in writing.
- Track deadlines and send notices using methods the contract allows, with delivery confirmation.
- Keep receipts, timestamps, and escrow acknowledgments.
- Avoid waiving protections or making deposits nonrefundable unless you fully understand the risk and have consulted a local professional.
Structure a strong, protected offer
Use this checklist to balance competitiveness with protection in Hanover:
- Choose an earnest money amount that signals commitment. Many offers land around 1% to 2% locally. Consider 2% or a faster deposit on highly competitive listings if it fits your comfort level.
- Keep core contingencies: inspection, financing, appraisal, and title. Tighten timelines only if you are ready to move quickly.
- Shorten but do not rush. A 7 to 10 day inspection window is common. Compressing to 5 days can help in a bidding situation if you can schedule promptly.
- Deliver the deposit quickly, often within 24 to 48 hours, and get written confirmation from the escrow holder.
- Use an escalation clause or an earnest money increase if competing instead of defaulting to nonrefundable money.
Typical timeline example
- Offer accepted to earnest money delivered: 24 to 72 hours
- Home inspection period: 7 to 10 business days
- Appraisal ordered right after loan application, with results in 7 to 14 days on average
- Financing commitment: 21 to 30 days from acceptance, depending on your lender
- Closing: typically 30 to 60 days from acceptance, based on lender, title work, and schedules
Tips for relocating buyers
If you are buying from out of state or on a tight schedule, you can stay competitive without sacrificing protection:
- Arrange a remote‑friendly inspection plan with your agent and inspector. Video or virtual walkthroughs can help you move quickly within the inspection window.
- Start loan application and appraisal scheduling immediately after acceptance to keep financing timelines on track.
- Confirm wiring and delivery instructions with your escrow holder before you send any funds.
- Keep your earnest money refundable while strengthening other terms, such as a quick deposit or flexible closing.
Common mistakes to avoid
- Offering nonrefundable money before you have inspected the home or confirmed financing comfort.
- Missing contingency deadlines or failing to send notices exactly as the contract requires.
- Wiring funds using instructions received only by email without verbal confirmation from a known contact.
- Not getting a written receipt from the escrow holder.
Work with a trusted local guide
Hanover’s market is shaped by limited inventory and strong demand in parts of the Upper Valley. The right earnest money amount, clear timelines, and well‑written contingencies can help you compete while protecting your deposit. If you want help tailoring a strategy to your price point and timing, reach out to a local, high‑touch team that understands how Hanover offers are winning right now.
Have questions about deposit size, escrow holders, or how to write a strong but safe offer in Hanover? Connect with Jessica Dolan for a personalized consultation.
FAQs
What is earnest money in New Hampshire?
- It is a good‑faith deposit you submit with an accepted offer that shows you intend to complete the purchase. It is credited to your down payment and closing costs at closing or refunded if your contract allows and you cancel within the terms.
How much earnest money is typical in Hanover?
- Many buyers start around 1% to 3% of the price. In Hanover’s competitive spots, 2% is common for stronger offers, while first‑time buyers often stay in the 1% to 2% range.
Who holds earnest money in Hanover transactions?
- The listing broker, the buyer’s broker, a closing attorney, or a title company often holds funds in a trust or escrow account. Your contract will name the holder and how funds are released.
When is earnest money refundable?
- If you cancel under a valid contingency within the deadline and follow the notice requirements, your deposit is typically refunded. Common protections include inspection, financing, appraisal, and title contingencies.
Can I lose my earnest money?
- Yes. You can forfeit it if you miss deadlines, fail to deliver required notices, default without a contractual reason, or agree to make the deposit nonrefundable.
How fast must I deliver the deposit?
- Many contracts require delivery within 24 to 72 hours of acceptance. Check your agreement for the exact deadline and acceptable forms of payment.
Is wiring the deposit safe?
- It can be safe if you verify instructions by phone with the escrow holder using a trusted number, then confirm receipt in writing. Be cautious of last‑minute email changes to wire instructions.
