You are about to write an offer on a Northbrook home and want to get the earnest money right. That deposit can help you win in a competitive market, yet you also want to keep it protected if something changes. In a few minutes, you will understand how much to offer, who holds the funds, how contingencies work, and the steps that help you avoid costly mistakes. Let’s dive in.
Earnest money basics in Illinois
Earnest money is a good‑faith deposit that shows a seller you are serious. If the sale closes, the deposit is credited toward your purchase price and closing costs. It is standard in Illinois residential contracts, including Chicago’s North Shore, even though state law does not require it.
Your contract sets the rules for the deposit. It states the amount, who holds it, how and when you deliver it, and what happens if either party ends the deal. Common Illinois contract forms also include contingencies that protect your deposit if you terminate within the allowed timelines.
Typical amounts in Northbrook
There is no fixed amount by law. In practice, Northbrook buyers use market‑driven ranges that reflect price point and competition.
- Entry to mid‑price homes often see flat deposits of about $1,000 to $5,000.
- Mid to higher‑priced homes commonly use a percentage. Around 1% to 2% of the purchase price is a typical reference point in active markets.
- In very competitive situations, buyers sometimes offer larger deposits to stand out.
As a simple example, on a $600,000 home, buyers often offer around $5,000 to $12,000. Some use about 1%, or $6,000, when activity is strong. Because Northbrook demand varies by neighborhood and price tier, ask your agent for recent accepted‑offer examples from the past 30 to 60 days.
Who holds your deposit
The contract names the escrow holder. In many Illinois deals, that is a title company or one of the parties’ attorneys. Some brokerages also hold escrow where permitted. The key is to use a reputable escrowee and to get written confirmation when funds are received into the escrow account.
At closing, the escrowee credits your earnest money toward your bottom line. You will see it on your settlement statement applied to the purchase price, closing costs, or prepaids, depending on how your lender and title company allocate it.
Timing and payment methods
Your contract will state when and how you must deliver the deposit. Many buyers submit a check or electronic payment with the offer or within a short window after acceptance, such as within 48 hours. Make sure the contract matches the plan so you hit the deadline without stress.
Accepted payment methods vary by escrowee. Common choices include a certified or cashier’s check, a wire transfer to the escrow account, or an electronic funds transfer if the escrowee supports it. Avoid sending funds to any personal account. Always verify wiring instructions by calling a verified phone number for the title company or attorney, not one pulled only from an email.
Once the escrowee has your funds, ask for a written receipt that shows the amount, date received, and escrow account details. Keep it with your contract file.
Attorney review and key contingencies
Most Illinois contracts include an attorney review period. During that window, your attorney and the seller’s attorney can approve the contract, propose changes, or disapprove it. If your attorney disapproves within the agreed time, the contract typically ends and your earnest money is returned under the contract’s terms.
Inspection, financing, and appraisal contingencies offer additional protection if you follow the rules. A typical inspection clause gives you a set number of days, often 7 to 10, to complete inspections and either request repairs or terminate. If you terminate properly within that period, your deposit is usually refundable.
Financing and appraisal contingencies work on defined timelines as well. If your lender cannot approve financing by the deadline and you send the required notice, you can often cancel and recover your deposit. If the appraisal comes in low, the contract may allow renegotiation or termination. Make sure you understand the exact steps for notice and timing.
Waiving contingencies can help you compete, but it raises risk to your earnest money. Only consider waivers if you have a strong plan, such as verified cash reserves, a robust pre‑approval, or other risk controls.
Refunds, forfeiture, and disputes
Your earnest money is typically refundable when the contract expressly allows it. Common examples include a timely termination under attorney review, inspection, financing, or appraisal contingencies, or if the seller defaults.
You risk forfeiture if you breach the contract after contingencies are removed or you do not close without a permitted reason. Some contracts let a seller keep the earnest money as liquidated damages, subject to the contract language and applicable law.
If a dispute arises, the escrow holder will often require a mutual written release signed by both parties, or a court order. In some cases, the escrowee may file an interpleader action, asking a court to decide who should get the funds. Clear contract timelines and proper written notices help reduce the chance of disputes.
Offer strategy for Northbrook buyers
Northbrook is a high‑demand suburb, and sellers watch for strong, clean offers. Your deposit can signal seriousness, but it is one piece of a full strategy. Consider the whole package: price, closing timeline, financing strength, and contingency terms.
- Use very recent comps on earnest money. Ask your agent what deposits won similar homes in the last 30 to 60 days.
- Calibrate your deposit to market activity. If the listing has multiple offers, a larger deposit can help your offer stand out.
- Align timelines and methods. Make sure your deposit delivery method matches the contract so you can fund quickly and provide a receipt.
- Keep key protections. If you tighten timelines to compete, keep inspection, financing, and attorney review periods realistic so you do not create avoidable risk.
Buyer checklist
Before you write the offer:
- Decide on a deposit amount that signals strength and fits your risk comfort.
- Confirm who will hold escrow and how they accept funds.
- Have funds liquid and traceable, such as a cashier’s check or a ready wire.
In the contract, double‑check:
- Escrowee name and escrow account instructions.
- Exact amount and the deadline for delivery.
- Inspection, financing, appraisal, and attorney review timelines.
- Required notice methods and dispute language.
When you submit and after acceptance:
- Include the deposit or state clearly when and how it will be delivered.
- Verify wiring instructions through a trusted phone number.
- Obtain and save a written escrow receipt.
- Track all contingency dates and send any notices in writing and on time.
If you need to terminate under a contingency:
- Follow the contract’s notice steps exactly, within the timeline.
- Keep copies of your notice and delivery confirmation.
- Request written confirmation from the escrowee about the refund and timing.
Common mistakes to avoid
- Guessing the deposit amount without local data. Use current Northbrook examples, not last year’s norms.
- Missing contingency deadlines. Put dates on your calendar and communicate with your agent and lender.
- Wiring to the wrong account. Independently confirm instructions with the escrowee before sending funds.
- Waiving protections casually. Only tighten or waive contingencies after you understand the specific risks to your deposit.
- Assuming a simple refund. If the other party disputes, the escrowee may hold funds until a mutual release or court direction.
Ready to compete in Northbrook?
A right‑sized earnest money deposit can strengthen your offer, while smart contract timelines and clean notices protect your funds. With focused preparation and clear communication, you can compete confidently and keep your deposit safe.
If you want a North Shore team that blends local insight with disciplined offer strategy, connect with LWG Real Estate. Our advisors will help you right‑size your deposit, structure your contingencies, and move quickly when the perfect Northbrook home hits the market.
FAQs
How much earnest money should I offer in Northbrook?
- There is no fixed rule. Many buyers use a few thousand dollars on lower‑priced homes, and around 1% to 2% of price for higher‑end homes, adjusted for current competition.
Who holds earnest money and is it safe?
- A title company, brokerage escrow, or attorney typically holds the funds. Choose a reputable escrowee, verify wiring instructions independently, and get a written receipt.
Can I get my deposit back after inspection?
- If you terminate within the inspection period using the notice method the contract requires, the deposit is usually refundable per the contract terms.
What happens during attorney review in Illinois?
- Attorneys can approve, modify, or disapprove the contract during the review period. A timely disapproval typically ends the contract and returns the deposit as stated in the contract.
When could I lose my earnest money?
- You risk forfeiture if you breach after removing contingencies or fail to close without a permitted reason. The contract controls remedies, which may include the seller keeping the deposit.
