Putting a large deposit into escrow on a Beverly Hills home can feel intense. You want to move fast, signal that you are serious, and keep your money safe. If you understand how earnest money works, when it is due, and how contingencies protect you, you can act with confidence. This guide breaks it down in plain language so you can navigate luxury deals with less stress and fewer surprises. Let’s dive in.
Earnest money basics in Beverly Hills
Earnest money is the deposit you place into escrow after your offer is accepted. It shows good faith, and it applies to your purchase at closing. If the deal does not close, the deposit is handled according to your contract and the escrow instructions.
In California, the purchase contract often uses the California Association of Realtors Residential Purchase Agreement. You will see detailed terms on deposits, timelines, and contingencies in those forms and related advisories from the California Association of Realtors. Escrow companies act as fiduciaries and only move funds according to written instructions and applicable law.
Escrow companies in California are licensed and regulated. You can verify an escrow firm and learn more about oversight through the California Department of Financial Protection and Innovation and check real estate license status with the California Department of Real Estate.
How much and when to deposit
In Beverly Hills and nearby luxury markets, deposits are usually larger than in median‑price areas. Amounts are negotiated deal by deal, often reaching tens of thousands of dollars or more, depending on the price, competition, and whether you are paying cash or financing.
Timing is strict. The initial deposit is commonly due within 24 to 72 hours of acceptance, often stated as “within 3 business days.” High‑value deals move quickly, so be ready to fund promptly once your offer is signed.
You can also negotiate deposit structure to balance speed and risk. Many luxury contracts use a staged approach, such as an initial deposit soon after acceptance and a second deposit when you remove contingencies. Off‑market and pocket listings may push for larger immediate deposits to show commitment.
How contingencies protect your deposit
Contingencies create clear windows to investigate the property and your financing. If you cancel properly within a contingency period, your deposit is typically refundable under the contract.
Inspection contingency
You review property condition, reports, and disclosures during this period. In high‑end purchases, your due diligence often includes architectural, structural, pool and systems experts, permit history, and seismic considerations. If you cancel within the inspection window using the required forms, the deposit is usually returned per the contract.
Appraisal contingency in luxury deals
Luxury properties sometimes face appraisal gaps because comparable sales are limited. If the appraisal comes in low and you have an appraisal contingency, you can usually cancel on time or renegotiate. Some buyers add appraisal‑gap language to agree to cover a shortfall up to a set cap, which can strengthen an offer.
Loan contingency
If you are financing and cannot secure your loan within the loan contingency period, you can typically cancel and retain your deposit, provided you comply with the contract’s notice requirements.
Title and disclosures
If title issues or undisclosed material problems arise that cannot be cured, you may be able to cancel and have your deposit returned. Always follow the written procedures and deadlines in the contract.
Removing contingencies in writing
Every contingency must be removed or exercised in writing. Once you remove contingencies, your deposit is more exposed if you later fail to close without a contract‑based reason.
Liquidated damages clause basics
Many California contracts include an optional liquidated damages clause. If it is included and properly initialed, the seller may accept the buyer’s deposit as the agreed remedy if the buyer breaches. The specifics live in the contract forms from the California Association of Realtors.
Escrow flow at a glance
- Offer accepted, escrow opens, and you wire or deliver the initial deposit within the required timeframe.
- Escrow holds funds while you work through inspections, appraisal, financing, and disclosures.
- You remove contingencies in writing by the stated deadlines, or you cancel within a valid contingency period.
- If negotiated, you make any additional deposits according to the schedule.
- At closing, escrow applies your deposit to the purchase price and disburses funds per the closing instructions.
Wire safety for large deposits
Real estate wire fraud is a real risk, especially in high‑value deals. Federal and industry groups have warned the public to verify instructions and never rely on email alone. You can review active guidance from the Federal Bureau of Investigation and member advisories from the National Association of Realtors and the California Association of Realtors.
Follow these best practices for wiring funds safely:
- Always verify wire instructions by phone using a number you obtain independently, such as the escrow company’s official website or a trusted business card. Do not rely solely on email.
- Use two channels to confirm, for example a phone call and a secure portal message. Ask about call‑back verification before any transfer.
- Confirm the escrow company’s identity and license. You can check escrow oversight at the California Department of Financial Protection and Innovation.
- Request a written receipt or acknowledgment from escrow once funds arrive. Keep your bank’s confirmation number and wire receipt.
- Send funds from your primary bank account. Confirm cut‑off times and exact account details with your designated escrow officer.
- Ask about acceptable alternatives for initial deposits, such as a cashier’s check, if the escrow company allows it.
If you suspect fraud, contact your bank and escrow immediately to attempt a recall and document every step. Report the incident to appropriate authorities as advised by industry and federal guidance.
Buyer checklist: reduce deposit risk
Before wiring:
- Confirm the escrow company’s identity and licensing through trusted sources, including the California Department of Financial Protection and Innovation.
- Obtain wire instructions directly from escrow by phone or a secure portal. Avoid instructions forwarded by unverified email.
- Provide proof of funds when requested, such as bank statements or a letter confirming liquid assets.
- Ask escrow for a written receipt and keep your bank’s confirmation when you send the wire.
Contract considerations:
- Keep reasonable windows for inspection, appraisal, and financing. Only waive contingencies if you fully understand the risk.
- If waiving appraisal or loan contingencies, document how you will cover a potential gap and confirm lender support.
- Consider staged deposits that increase after you remove contingencies to balance speed with protection.
- Choose experienced escrow, title, and legal advisors who regularly handle multi‑million‑dollar closings.
Seller checklist: protect certainty and funds
- Require a prompt initial deposit, often within 24 to 72 hours, plus proof of funds for high‑value buyers.
- Use a reputable escrow or title company with clear wire‑verification procedures.
- Work with your agent to structure contingency deadlines, deposit schedules, and any liquidated damages options so expectations are clear.
Smart negotiation moves in Beverly Hills
- Spell out a deposit schedule. Many luxury deals use an initial deposit at acceptance, then another deposit at contingency removal.
- Define contingency deadlines for inspection, appraisal, and loan approval to avoid ambiguity.
- Add a wire‑verification clause that requires phone confirmation of instructions using the escrow company’s official number.
- Consider appraisal‑gap language. If you want to strengthen your position, state the maximum out‑of‑pocket amount you will cover above the appraised value.
Work with a valuation‑driven Beverly Hills advisor
High‑end purchases reward careful planning. You need accurate pricing guidance, a clear deposit strategy, tight timeline management, and proven wire‑safety protocols. With appraisal‑grade valuation expertise and a process‑driven team, you get a steady hand from offer to close.
If you are navigating a Beverly Hills purchase or sale and want a calm, informed approach that reduces risk, connect with Jennifer Landon. Schedule a valuation and strategy conversation, align on your deposit plan, and move forward with confidence.
FAQs
What is earnest money in a Beverly Hills home purchase?
- It is the buyer’s deposit placed into escrow after acceptance to show good faith, held under the contract and escrow instructions, then credited at closing.
How fast is the earnest money deposit due after acceptance?
- In luxury Los Angeles markets it is commonly due within 24 to 72 hours, often stated as within 3 business days in the contract.
How big is a typical deposit for Beverly Hills luxury homes?
- Amounts are negotiated and usually larger than median‑price markets, often tens of thousands of dollars or more depending on price, competition, and buyer strength.
Can I get my deposit back if the appraisal is low?
- If you have an appraisal contingency and cancel properly within the deadline, the deposit is typically refundable under the contract terms.
What is a liquidated damages clause and how does it affect my deposit?
- It is an optional contract remedy in common California forms where the seller may accept the deposit as damages if the buyer breaches, but it must be properly included and initialed.
How do I verify wire instructions to avoid fraud when sending my deposit?
- Call the escrow company using an independently sourced phone number, confirm via two channels, and review fraud guidance from the FBI and NAR before sending funds.
Who regulates escrow companies and real estate licenses in California?
- Escrow oversight is through the California Department of Financial Protection and Innovation, and real estate licenses are regulated by the California Department of Real Estate.
