Buying in Northbrook is exciting, but the moment you write an offer, one question comes fast: how much earnest money should you put down, and what happens to it? You want to make a strong offer without taking on unnecessary risk. With the right amount, clear deadlines, and smart contingency planning, you can protect your deposit and still stand out. This guide walks you through how earnest money works in Illinois, what is typical on the North Shore, and practical steps to keep your funds safe. Let’s dive in.
Earnest money basics in Illinois
What it is and why it matters
Earnest money is your good‑faith deposit that shows you are serious about buying a home. In Illinois, it is part of your purchase contract and follows the terms you and the seller agree to. If all goes well, your earnest money goes toward your closing costs or purchase price.
The deposit also gives the seller some protection if you breach the contract without a valid contingency. This is one reason sellers care about both the amount and the timing of your deposit.
How it fits into closing
Your contract will state how much you will deposit, who will hold the funds, and the deadline for delivery. At closing, the earnest money is applied to your purchase price or costs, unless your agreement says otherwise. If your deal ends under a covered contingency, you can typically recover your funds once the escrow holder receives proper notice.
Northbrook norms and amounts
How much buyers usually put down
On many Illinois and suburban Chicago deals, buyers use a flat amount between 1,000 and 5,000 dollars for modestly priced homes. A common guideline is 1 to 2 percent of the purchase price. In higher priced North Shore properties, some buyers choose larger deposits, and in very competitive situations, 3 percent or more is sometimes used to strengthen an offer.
The right amount depends on price, competition, and your comfort with risk. In a seller’s market, larger deposits can make your offer stand out, but they also raise the stakes if deadlines are missed.
When and how to deliver
Most contracts in the area require you to deliver earnest money within 24 to 72 hours after the seller accepts your offer. The contract will name the escrow holder and spell out the delivery method. Common options include personal or certified check, cashier’s check, or a wire to the title or escrow company.
If you plan to wire funds, confirm the instructions by phone using a known number for the escrow holder or your agent. Always use traceable methods and request a receipt.
Using earnest money to stand out
If multiple offers are likely, you can pair a fair deposit with clear, realistic timelines. Buyers sometimes raise the earnest money amount, tighten inspection or financing dates, or add an escalation clause. Each step can help, but it also increases risk if you cannot meet a deadline or financing terms change.
Where your deposit goes
Who holds the funds
In Northbrook and across the North Shore, earnest money is commonly held by a title company or closing attorney. In some cases, a listing or buyer’s broker can hold the funds in a trust account, subject to Illinois licensing rules. Your purchase agreement identifies the holder and how the funds will be handled.
Safeguards and receipts
Title companies and attorneys have formal escrow procedures and issue receipts. When a broker holds funds, they must deposit them into a regulated trust account with proper records. You should receive written confirmation that shows who holds the money, where it is deposited, and when it will be released.
Keep copies of all receipts and any escrow instructions. Good documentation makes any future refund faster and smoother.
Avoid wire fraud
Wire fraud is a real risk in real estate. Before sending any funds, call the escrow holder using a verified phone number to confirm routing and account information. Do not rely only on email. After you send the wire, ask for written confirmation right away.
If anything looks off, pause and verify with the title company or your agent. Taking a few extra minutes can prevent a costly mistake.
Contingencies and your protection
Inspection, financing, and appraisal
Your inspection contingency lets you investigate the property within a set period and, if needed, request repairs or cancel within the deadline. The financing or mortgage contingency protects you if your loan is denied under the agreed terms and timeline. An appraisal contingency helps if the appraisal comes in below the contract price and you cannot bridge the gap or agree on a price change.
When you cancel within these timelines and follow the contract requirements, you can typically recover your earnest money. Deadlines matter, so track them closely.
Title and sale‑of‑home
A title contingency allows you to cancel if a title defect is not resolved. If your offer includes a sale‑of‑home contingency, you have time to sell your current property before moving forward. If the condition is not met, you may be able to terminate per the contract and recover your deposit.
When sellers may keep it
If you breach the contract after contingencies expire or without a contractual reason, the seller may be entitled to your earnest money as liquidated damages. Whether the seller can keep your deposit depends on the purchase agreement and the facts of the situation. Disagreements can lead to negotiation, mediation, or a court decision.
Getting a refund
If you end the contract within a protected contingency, the escrow holder usually needs written termination and any required documentation before releasing funds. If there is a dispute, the escrow holder may keep the money in the account until both parties give joint instructions or a court orders a disbursement.
Smart negotiating tips
Pick the right amount
A smaller deposit reduces your exposure if something goes wrong, but it may not carry as much weight with a seller. A 1 to 2 percent deposit often strikes a balance for Northbrook buyers. In a hot segment, consider a higher amount only if your financing is strong and your timelines are realistic.
Talk with your agent about current competition in your price range. They can help you choose a number that shows commitment without creating unnecessary risk.
Contract clauses to check
Review these items before you sign:
- Exact earnest money amount and delivery deadline
- Escrow holder name, address, and contact details
- Inspection, appraisal, and financing deadlines, with clear dates
- Escrow disbursement instructions and dispute resolution steps
- What happens if the seller breaches, including remedies
Make sure each deadline is on your calendar and that everyone on your team knows their role.
When to shorten or waive
Shortening or waiving contingencies can help you win in a competitive market, but it also increases the chance of losing your deposit if you must cancel. Consider only after a strong pre‑approval, early conversations with your lender, and, if possible, pre‑offer inspections or information. Always weigh the benefit of a stronger offer against the risk to your earnest money.
Timeline at a glance
- Offer accepted
- Earnest money delivered within 24 to 72 hours to the named escrow holder
- Inspection period starts, requests or cancellation must be made within the deadline
- Appraisal ordered, underwriting continues, financing contingency date approaches
- Title work completed and any issues addressed
- Closing day, earnest money applied to your purchase price or costs
Special situations in Cook County
Short sales and bank‑owned
Short sales and bank‑owned properties often follow different processes. Approval can take longer and some sellers use different escrow procedures. Ask early how your deposit will be handled, how long approval might take, and what happens if timelines slip.
New construction
New builds may require staged deposits or separate addenda that outline release and forfeiture terms. Read every clause and confirm when funds become nonrefundable. Because builder contracts vary, ask detailed questions about timelines, change orders, and what triggers a return of funds.
Disputes and next steps
If you and the seller cannot agree on a disbursement, the escrow holder may retain the deposit until there is a signed agreement or a court order. Keep a clear record of inspection reports, lender communications, and any notices you sent. Strong documentation helps resolve issues faster.
Work with a local guide
Choosing the right earnest money strategy is as local as it gets. Northbrook sits within a North Shore market that can shift quickly, and norms for deposits and timelines move with it. An experienced local broker will help you set the right amount, choose the right escrow holder, and manage every deadline so your deposit stays protected.
If you want a measured plan for your offer, a clear checklist, and hands‑on guidance from offer to closing, connect with Anne Hardy of Berkshire Hathaway HomeServices Chicago. With deep North Shore experience and a high‑touch approach, she will help you compete with confidence and protect your interests. Ready to plan your next move? Schedule a free consultation with Anne Hardy.
FAQs
What is earnest money in an Illinois home purchase?
- It is a good‑faith deposit held in escrow under your purchase contract, applied to your price or costs at closing unless your agreement states otherwise.
How much earnest money do Northbrook buyers usually put down?
- Many buyers use 1 to 2 percent of the price, with 1,000 to 5,000 dollars common for modest homes and larger deposits for higher priced or competitive situations.
When is earnest money due after my offer is accepted?
- Most local contracts require delivery within 24 to 72 hours to the named escrow holder by check or wire, as specified in your agreement.
Who holds earnest money in Northbrook transactions?
- Title companies or closing attorneys commonly hold funds, though a listing or buyer’s broker can hold deposits in a regulated trust account if the parties agree.
When can a seller keep my earnest money?
- If you breach the contract after contingencies expire or without contractual grounds, the seller may be entitled to the deposit as liquidated damages, subject to the contract’s terms.
