You found a home you love in Lockport and now the seller is asking for earnest money. What is it, how much should you offer, and how do you keep it safe? Buying in Will County moves fast, and a clear plan for your deposit can help your offer stand out while reducing risk. In this guide, you’ll learn the basics, local norms, and practical steps so you can move forward with confidence. Let’s dive in.
Earnest money explained
Earnest money is a good-faith deposit you offer the seller when you sign a purchase contract. It shows you are serious and ready to follow through. At closing, it is usually applied to your down payment or closing costs.
This deposit helps the seller feel comfortable taking the home off the market. It can also serve as partial protection for the seller if a buyer defaults under the contract. Earnest money is not the same as your full down payment, and it is not recorded with the county.
How it works in Illinois
In Illinois, earnest money is a contractual term, not a legal requirement. Most buyers use standard purchase contracts that spell out the amount, who will hold the funds, deposit timing, and how the money can be released.
Your deposit is typically held by a neutral title company, a closing attorney, or sometimes the listing broker’s escrow account. The contract should name the escrow holder and where the funds will be placed. The holder must safeguard the funds and follow the contract’s instructions.
Deposit timing is set by the contract. Many local deals call for delivery within 24 to 72 hours or a set number of business days after acceptance. Always deliver funds by the deadline and get a receipt.
Will County specifics
In Will County, it’s common for the named title company to hold the deposit in escrow. Local market conditions drive strategy. In competitive segments around Lockport, larger deposits can help your offer stand out, while a balanced market may allow more flexibility.
Your earnest money is a private part of the transaction. It is not recorded with the Will County Recorder, which records deeds and mortgages, not buyer deposits.
How much to offer in Lockport
Typical earnest money ranges for resale homes are often 1% to 3% of the purchase price. On lower-priced homes, buyers sometimes offer a flat $1,000 to $5,000. In multiple-offer situations, some buyers offer more to strengthen their position.
Choose an amount that matches your budget and risk tolerance. A higher deposit signals strength, but it also raises your potential loss if you default under the contract. Your agent can advise what is customary for your price point and neighborhood.
New construction is different. Builders often require larger deposits and stricter refund rules. Read the builder’s contract carefully and consider legal review if terms are complex.
Contingencies and refunds
Contingencies protect you and influence whether your earnest money is refundable. Common protections include inspection, financing, appraisal, and title contingencies. Some buyers also use a home-sale contingency, though it is less common in tight markets.
If a written contingency is not satisfied and you cancel within the contract’s deadlines and procedures, your deposit is typically refundable. If you default for reasons not covered in the contract, you may forfeit the deposit as liquidated damages if the contract allows it. The contract language and dates control outcomes.
If there is a dispute over release of funds, the contract’s dispute clause will guide next steps. Parties often sign a mutual release. If no agreement is reached, the escrow holder may keep the funds until resolution or interplead them with a court.
Lender documentation checklist
Your lender will verify the source of your earnest money. Be ready to provide:
- Copy of the check or wire receipt and a stamped escrow receipt.
- Bank statements showing the transfer into escrow.
- Gift letter and documentation if the funds are a gift.
- Explanations for large recent deposits, per the loan program’s rules.
Sharing these early helps avoid delays and keeps underwriting on track.
Step-by-step buyer plan
- Discuss strategy with your agent. Decide the amount, who will hold the funds, and which contingencies to include.
- Write a clear offer. Specify the earnest money amount, the escrow holder by name, and the exact deposit deadline.
- Deliver funds on time. Use the agreed method (check, certified check, or wire) and obtain a written receipt.
- Track your deadlines. Note inspection, financing, and appraisal timeframes and how to deliver notices.
- Document your source of funds. Send your lender the deposit proof and any gift paperwork early.
- Follow the contract if canceling. Submit written notices properly and on time to preserve refund rights.
- Confirm the credit at closing. Make sure your deposit is applied to your closing costs or down payment as stated.
New construction notes
Builder contracts often have different deposit schedules and refund rules. Some deposits may be nonrefundable or only partially refundable. Expect milestones that require additional funds. Read every clause and ask questions before you sign.
If terms feel one-sided or unclear, consider a real estate attorney for contract review. This is especially important if you are asked to waive common protections.
Competing in multiple offers
When inventory is tight in Will County, you can strengthen your offer without changing price by:
- Increasing your earnest money amount.
- Shortening contingency periods after you assess the risk.
- Pairing a strong deposit with clear documentation and a clean contract.
Each move increases risk, so weigh the upside against your comfort level. Keep protections that matter to you and meet all deadlines.
Local support team
Lean on local pros who know Lockport and Will County processes:
- A local real estate agent for pricing, norms, and contract strategy.
- A title company or closing attorney to hold escrow and explain release procedures.
- Your loan officer to confirm what documentation is needed and when.
- A real estate attorney when contract terms are complex or unusual.
Common mistakes to avoid
- Not naming a specific escrow holder and account in the contract.
- Missing the deposit deadline or failing to get a receipt.
- Ignoring contingency timelines or notice rules.
- Wiring funds based on email alone. Always confirm instructions by phone with a known number.
- Waiving key contingencies without understanding the risk.
Final takeaways
Earnest money is a powerful tool in your Lockport home purchase. Set the amount with care, protect yourself with clear contingencies, and document everything for your lender. With a solid plan and the right local guidance, you can compete confidently and keep your deposit safe.
Have questions about your offer strategy or deposit terms in Will County? Connect with Christine Wilczek and Jason Bacza for local guidance and a winning plan.
FAQs
What is earnest money in an Illinois home purchase?
- It is a good-faith deposit you pay when your offer is accepted, held in escrow, and typically credited to your closing costs or down payment at closing.
How much earnest money is typical in Lockport?
- For many resale homes, buyers often offer $1,000 to $5,000 or roughly 1% to 3% of the price, adjusted for market conditions and risk tolerance.
When do you deposit earnest money after acceptance in Illinois?
- The contract sets the deadline, commonly 24 to 72 hours or a set number of business days after acceptance. Always follow the written timeline and get a receipt.
Who holds earnest money in Will County transactions?
- A neutral title company or closing attorney is common, though some listing brokers hold funds in trust. The contract should name the holder and account.
Can you get earnest money back after an inspection in Illinois?
- Yes, if your contract includes an inspection contingency and you cancel properly within the allowed timeframe and notice rules.
How does earnest money affect your mortgage approval?
- Lenders accept the deposit toward closing, but they require proof of source, such as check or wire receipts and bank statements. Gifted funds need a gift letter.
