Earnest Money in MA vs. NH: What Buyers Should Know

Thinking about buying in Dracut while also touring homes just over the New Hampshire line? You are not alone. Many local buyers compare options on both sides of the border, and the rules around earnest money can feel confusing. In a few minutes, you will understand typical deposit amounts, timing, how refunds work, and simple steps to protect your money in Massachusetts and New Hampshire. Let’s dive in.

Earnest money basics

Earnest money is a good‑faith deposit you put down when your offer is accepted. It shows the seller you are serious and is credited to your purchase price at closing. The funds are held by a neutral party in escrow until closing or until the contract ends according to its terms.

This deposit helps sellers feel confident in your offer and may be treated as the agreed remedy if a buyer defaults. Your contract spells out exactly how the deposit is handled, which is why clear dates and instructions matter.

MA vs. NH: what actually differs

Typical deposit size

• Massachusetts (Dracut and Middlesex County): Buyers commonly offer around 1% to 3% of the purchase price. Many offers start with a modest binder of about $1,000 to $5,000, then increase to the full deposit at the Purchase and Sale (P&S) signing.
• New Hampshire: You often see a flat $1,000 to $5,000 in many markets, or about 1% in higher‑priced or more competitive areas. Customs can vary by town and current conditions.

These are common ranges, not hard rules. Your offer is negotiable and should match price point and competition.

When you pay

In both states, you might see two patterns:

1. Initial binder with the offer, then the larger deposit at P&S.
2. Full deposit submitted with the offer in competitive situations.

In Massachusetts, the two‑step approach is very common, especially with attorney review between offer and P&S. In New Hampshire, either approach is used, and some sellers request the full deposit at acceptance.

Who holds the funds

Your earnest money is placed with a neutral holder:

• Listing broker’s trust account.
• Attorney escrow account (very common in Massachusetts).
• Title or escrow company (more common in some New Hampshire closings).

Always get a written receipt that shows the amount, date, who holds the funds, and how release of funds is authorized.

Contingencies and refund rights

Common buyer protections

Most buyers include contingencies that safeguard the deposit if a problem arises:

• Home inspection window (often about 7 to 10 business days, but negotiable).
• Financing or mortgage commitment by a set date.
• Appraisal, if required by your lender.
• Title review and, for condos, document review.
• Sale of your current home in some cases.

Make sure the contract states exact deadlines and how to deliver notices. Written notice by a deadline is typical.

When deposits can be forfeited

If you default without a valid contingency or miss a deadline, the seller may have the right to keep the deposit. Many P&S forms use a liquidated damages clause that makes the deposit the seller’s agreed remedy. If you cancel under a contingency on time and in the required way, your deposit is typically refundable.

What happens in a dispute

Escrow holders do not release funds without contractual authority or a joint instruction. If buyer and seller disagree, funds usually stay put until there is a mutual release or a court or arbitrator decides. Many disputes are resolved by negotiation to avoid legal costs.

Smart strategies for Dracut‑area buyers

Before you write an offer

• Ask your agent about typical deposit sizes for that town and price point on each side of the border.
• Decide your approach: smaller deposit with stronger contingencies, or larger deposit with tighter timelines.
• Have a solid mortgage preapproval. A strong financing profile can help you compete without overextending your deposit.

Delivering funds safely

• Use a certified or bank check, or a verified wire per the contract and escrow instructions.
• Get a written receipt that lists the amount, payer, date, and escrow holder.
• Watch for wire‑fraud schemes. Never rely on changed wire instructions sent by email alone. Call a trusted, known phone number to verify before sending.

Contract terms to confirm

• Exact deposit amounts and whether the initial binder is separate from the full deposit.
• Deadline mechanics for each contingency and how notices must be delivered.
• Liquidated damages language that defines whether the deposit is the seller’s exclusive remedy.
• Who holds the deposit and what is required to release it.
• Whether disputes go to court or arbitration.

Sample deposit playbooks

• Non‑competitive market: modest binder of about $1,000 to $2,500, then 1% to 2% at P&S after attorney review.
• Balanced market: binder of about $2,500 to $5,000, then about 1% at P&S.
• Competitive market with multiple offers: deposit of 1% or more sooner, tighter contingency timelines, or limited inspection scope, but only if you are comfortable with the risk.

Real‑world examples

• If a Dracut home is listed at $400,000: A 1% deposit is $4,000. In Massachusetts, you might offer a $2,000 binder with the offer, then add $2,000 at P&S. In a competitive setting, you could deliver the full $4,000 upfront.
• If a Windham, NH home is listed at $600,000: Sellers might accept a flat $5,000 deposit in some cases, or expect closer to 1% at $6,000 in a stronger market. Talk with your agent about local expectations for that specific property.

Key takeaways

• Earnest money is negotiable and guided by local custom.
• Massachusetts often uses a two‑step deposit with attorney escrow at P&S. New Hampshire varies more, with brokers or title companies often holding funds.
• Your refund protection comes from clear contingencies and on‑time notices.
• Documentation is your friend. Keep receipts, verify wire instructions, and follow the contract exactly.

Next steps

If you are touring in Dracut, Pelham, Windham, or nearby towns, align your deposit strategy with the market on each side of the border. A tailored plan can keep you competitive without taking on unnecessary risk. When you are ready, we will help you compare custom norms, set the right deposit, and keep your contingencies on schedule.

Have questions about a specific property or offer? Reach out to the Key Team | Compass to talk through your options and next steps.

FAQs

How much earnest money is typical in MA vs. NH?

• In the Dracut area of Massachusetts, many buyers offer about 1% to 3% of the price, often split as a binder then more at P&S, while in New Hampshire you may see a flat $1,000 to $5,000 or about 1% in more competitive markets.

Who usually holds the deposit funds?

• Funds are typically held by a listing broker’s trust account, an attorney’s escrow account (very common in MA), or a title or escrow company (common in NH, depending on the closing setup).

What contingencies protect my deposit?

• Common protections include inspection, financing, appraisal, and title or condo document review, each with clear deadlines and notice requirements.

Can a seller keep my deposit if I back out?

• If you default without a valid contingency or miss a required deadline, the seller may claim the deposit under a liquidated damages clause; if you cancel properly under a contingency, the deposit is typically refundable.

What should I check before wiring my deposit?

• Verify wire instructions by calling a known, trusted number, get a written receipt after delivery, and confirm who holds the funds and how release works.

Are there big legal differences between MA and NH deposits?

• The core mechanics are similar in both states, but local customs differ on deposit size, who holds funds, and which contract forms are used; always confirm specifics with your agent and closing attorney.