Making an offer on a Hudson home is exciting, but the earnest money you include can shape the entire deal. You want to show the seller you’re serious while keeping your deposit safe if something changes. This guide walks you through how earnest money works in Wisconsin, what’s typical around Hudson and St. Croix County, and the steps you can take to protect your funds without weakening your offer. Let’s dive in.
Earnest money basics
Earnest money is a deposit you provide after a seller accepts your offer. It shows good faith and is credited toward your down payment or closing costs at closing. It is not an extra fee. The rules for how it is handled come from the written purchase agreement you sign with the seller.
Your contract will specify where the money is held, when it is due, and how it can be released. In Wisconsin, commonly used purchase forms include default language for deadlines, contingencies, and remedies. Always review those terms so you know how your deposit is protected.
How much to offer in Hudson
There is no set amount required by law. In practice, deposits range from a few thousand dollars to a percentage of the price. For many homes, you might see $1,000 to $5,000. In more competitive situations, buyers often choose 1 to 3 percent of the purchase price to help their offer stand out.
Local conditions matter. In Hudson and across St. Croix County, deposit norms can shift with seasonality and the number of multiple-offer situations. A local agent can help you align your deposit with the current market without taking on unnecessary risk.
When your deposit is due
Your offer should state the exact timing. Common options include delivering earnest money with the offer, within a certain number of business days after acceptance, or within a set number of days after execution. Clarity reduces risk. Put the deadline in writing and follow the delivery method named in the contract.
If you choose a short delivery window, make sure your funds are ready. Missing a deadline can create a contract issue and undermine your negotiating position.
Where the funds are held
Earnest money typically goes to one of the following:
- A listing brokerage trust account
- A buyer’s brokerage escrow account
- A title or escrow company
- An attorney serving as escrow agent
The custodian matters because it affects how money is released if there is a dispute. Title and escrow companies follow standard disbursement procedures based on your contract. Some buyers prefer a neutral escrow holder, such as a title company, to help avoid perceived conflicts in a dispute.
Safe ways to deliver funds
Your contract may allow certified check, personal check, or wire transfer. If you plan to wire funds, remember that wire fraud is a real risk. Protect yourself by verifying wiring instructions by phone using a number you know is authentic. Do not rely on email alone. Many buyers choose certified check delivery to reduce exposure to wire fraud.
Keep proof of delivery. Save copies of checks, receipts, or wire confirmations in your transaction file.
Contingencies that protect your deposit
Most buyers use contingencies to evaluate the property and secure financing. Common options include:
- Inspection contingency. You can inspect the home and cancel or negotiate during the defined window.
- Financing contingency. If your lender is unable to approve your loan within the timeline, you can usually cancel with proper documentation.
- Appraisal contingency. If the appraisal comes in low, you may renegotiate or cancel if you cannot reach new terms.
- Title contingency. If title defects cannot be cleared, you can terminate.
- Sale-of-home contingency. If you must sell your current home first, this provides a path to cancel if that sale does not occur.
Your contract sets each deadline and the steps you must take to cancel. If you act within the timeline and follow the notice requirements, you are generally entitled to a refund of your earnest money.
How to preserve your refund rights
The key is to meet deadlines and keep everything in writing. If you intend to cancel based on a contingency, deliver written notice exactly as the contract requires. Keep records of inspections, lender communications, and any denial letters tied to financing.
If you miss a deadline or do not follow the process in the contract, you could forfeit your deposit. Build a timeline with your agent on day one and set calendar reminders for each contingency window.
If a deal falls apart
If a contingency fails and you provide proper notice, your earnest money is typically refunded. If the buyer is the breaching party without a contract basis, the seller may be entitled to keep the deposit as liquidated damages if the contract includes that clause, or the seller may pursue other remedies.
If the seller breaches and refuses to close, you can usually cancel and recover your deposit. Additional remedies depend on the contract language and Wisconsin law.
If there is a dispute about releasing funds, the escrow holder will follow the procedures in the contract. They may require a mutual written release, or they may hold funds until a court or arbitration resolves the issue. Good documentation helps resolve disputes faster.
Balance strength and safety in Hudson
You can build a competitive offer in Hudson while still managing risk. Consider your comfort level and choose one of these approaches:
Conservative
- Modest earnest money, such as $1,000 to $3,000.
- Standard contingency timelines, for example inspection in 7 to 10 days and financing in 21 to 30 days.
- Strong preapproval and careful delivery and receipt practices.
Moderate
- Larger deposit, such as 1 percent of the price or a higher flat amount.
- Shorter contingency windows while keeping key protections.
- Maintain financing and appraisal protections, but tighten timelines to show confidence.
Aggressive
- Substantial deposit and very short or waived inspection timeline.
- Appraisal-gap or limited contingency language to compete in multiple offers.
- Only choose this path if you can afford the risk that your deposit could be forfeited and you have discussed the implications with your lender or attorney.
No matter your approach, a strong preapproval and clear proof of funds help sellers trust your offer. Shorter, realistic timelines can make a positive impression without putting your deposit at unnecessary risk.
Practical steps to protect your deposit
Use this checklist as you prepare your offer:
- Confirm current Hudson market norms for deposit sizes and multiple-offer frequency with your agent.
- State the exact earnest money amount and due date in the offer.
- Identify who will hold the funds and include the escrow or title company’s name.
- Put contingency deadlines in calendar terms with specific dates and times.
- Attach your lender preapproval and provide proof of funds for the deposit if requested.
- Verify any wiring instructions by phone using a trusted number.
- Keep copies of checks, receipts, notices, inspection reports, and lender communications.
- If you use a larger deposit to strengthen your offer, tighten your timelines and plan out inspection and loan milestones so you stay on track.
Local guidance that reduces stress
In the St. Croix River Valley, efficiency and clarity help you win competitive homes while keeping your deposit protected. A local team can help you structure clean terms, choose the right escrow holder, and keep your deadlines organized from acceptance to closing. This is especially useful in seasonal multiple-offer periods when timelines move quickly.
If you are weighing a higher deposit or shorter timelines, talk through the trade-offs first. A thoughtful strategy can give sellers confidence without exposing you to unnecessary risk.
Ready to structure a smart, strong offer in Hudson? Connect with the Platinum Real Estate Team for local insight, calm guidance, and a clear plan to protect your earnest money while you compete.
FAQs
What is earnest money in Wisconsin real estate?
- It is a good-faith deposit credited at closing and governed by your written purchase agreement, which sets deadlines, who holds the funds, and how they are released.
How much earnest money should Hudson buyers expect to pay?
- Many deposits are a few thousand dollars, and in competitive situations buyers often offer 1 to 3 percent of the price to stand out, based on local conditions.
When is earnest money due after offer acceptance?
- Your contract specifies timing, such as with the offer or within a set number of business days after acceptance; always put the exact deadline in writing.
Who holds my earnest money and does it matter?
- It can be held by a brokerage, title or escrow company, or an attorney; the custodian and your contract determine how funds are released in a dispute.
Can I get my earnest money back if financing falls through?
- Usually yes if you have a financing contingency and provide required documentation and written notice within the contract deadline.
What happens if the appraisal is low?
- If you have an appraisal contingency, you may renegotiate or cancel within the timeline; without it, you risk losing your deposit if you cannot close.
How do I avoid wire fraud when sending my deposit?
- Verify wiring instructions by calling a known phone number for the escrow or title company and avoid relying on email instructions alone.
What if the seller backs out of the deal?
- If the seller breaches, you can typically cancel and recover your earnest money, with other remedies depending on your contract and applicable law.
Is earnest money the same as a down payment?
- No, it is a deposit that applies toward your down payment or closing costs at closing, but it is governed by contract terms during the transaction.
What should I do first to protect my deposit?
- Set clear contract terms, verify who holds the funds, map your contingency deadlines, and keep written proof of every delivery and notice.
