Are you getting ready to make an offer on a home in Hot Springs and wondering how much earnest money you need? You are not alone. This small deposit can feel confusing, especially if you are buying in the Black Hills for the first time. In a few minutes, you will know what earnest money is, how much buyers in Hot Springs typically put down, and how to protect your deposit with smart contingencies. Let’s dive in.
What is earnest money?
Earnest money is a small deposit you include with your offer to show the seller you are serious. The funds sit in an escrow account with a title company or a broker’s trust account. If you close, the deposit is applied to your closing costs or down payment.
The deposit gives the seller confidence to accept your offer and pause showings while you complete inspections and financing. If you back out for a reason not allowed in the contract, you can lose the deposit. If you cancel under an allowed contingency, you usually get it back.
Earnest money is not the same as inspection, appraisal, or application fees. Those fees are paid to service providers and are often nonrefundable even if the deal falls through.
Typical amounts in Hot Springs
There is no fixed rule for earnest money in Fall River County. The amount depends on the price point, market conditions, and what your offer includes. Here are practical ranges that fit the Black Hills and Hot Springs market:
- Lower-priced homes: often a few hundred to a few thousand dollars, around $500 to $2,500.
- Mid-priced homes: commonly 1 percent to 3 percent of the price, or a set amount like $2,500 to $10,000.
- Competitive or higher-priced listings: buyers may offer a larger deposit to stand out.
Hot Springs is a small, rural market. For many modest homes, sellers expect a meaningful but not oversized deposit, often in the $1,000 to $5,000 range. The right number for you depends on the property and how many offers you are up against. Your agent can help you balance strength and safety.
How South Dakota contracts handle deposits
In South Dakota, the purchase agreement controls how earnest money works. Many transactions use forms from the South Dakota Association of REALTORS or local broker forms. Your contract should spell out:
- The earnest money amount.
- Who will hold the funds in escrow.
- The deadline to deposit the funds, often within 24 to 72 hours after both sides sign.
- When and how the funds are applied or released.
Most deposits go to a local title company or a brokerage trust account named in the contract. If the sale closes, the funds are credited to you. If the deal ends, the contract tells the escrow holder what to do next. If there is a disagreement, the escrow holder may hold the funds until both parties sign a release or a court or dispute process provides direction.
When your deposit is refundable
Your earnest money is usually refundable if you end the contract for a reason covered by a written contingency in the agreement. Common buyer protections include:
Inspection contingency
You can inspect the home and ask for repairs. If serious issues come up and you cannot reach an agreement with the seller, you can cancel within the inspection window and recover your deposit. Make sure your notice is in writing and on time.
Financing contingency
If you cannot get your loan approved by the deadline despite a good-faith effort, you can cancel and keep your deposit. Your contract may require a lender letter to document the denial.
Appraisal contingency
If the home appraises below the purchase price, you can renegotiate or cancel under the terms of your contract. If you cancel properly, your deposit is returned.
Title contingency
If the seller cannot deliver clear, marketable title within the time allowed, you can cancel and recover your deposit.
Sale-of-home contingency
If you must sell your current home first and that contingency is in the contract, you can cancel and keep your deposit if your sale does not close in time and you follow the notice rules.
Follow the rules
Most contingencies include deadlines and written notice steps. Missing a deadline or giving informal notice can put your deposit at risk. Keep everything in writing and confirm delivery.
Key timelines for Hot Springs buyers
Exact dates are set in your contract, but here is a helpful outline:
- Offer accepted: earnest money due per contract, commonly 24 to 72 hours after acceptance.
- Inspection period: often 5 to 10 business days. Schedule inspections right away so you can respond on time.
- Loan commitment: often 21 to 30 days, depending on your lender and loan type.
- Appraisal and title review: typically during the loan process and before closing.
- Closing: deposit applies to your down payment or closing costs.
Real-world examples
Use these examples as illustrations, not guarantees. Your situation may differ.
Example A: Modest-priced Hot Springs home at $150,000
- Offer price: $150,000
- Earnest money: $2,500 (about 1.7 percent)
- Inspection: 7-day window
- Financing: 21-day window
- Scenario: The inspection finds a foundation issue. The seller declines repairs. You cancel within the inspection period in writing, and your deposit is returned.
Example B: Competitive Black Hills listing at $325,000
- Offer price: $325,000
- Earnest money: $6,500 (2 percent)
- Inspection: 5-day window to be competitive
- Scenario: You schedule inspections immediately and keep all timelines tight. If a major issue appears and talks fail, your quick action protects your right to a refund.
How to stay protected and competitive
A strong offer does not mean taking on unnecessary risk. Local agents in Hot Springs often use these tactics to balance protection with appeal:
- Keep essential contingencies. Retain inspection, appraisal, financing, and title protections, but use realistic timelines so your offer stays competitive.
- Shorten the inspection period if you can move fast. Schedule inspections immediately after acceptance.
- Name a trusted local escrow holder. The contract should list the title company or escrow agent and require written confirmation of your deposit.
- Clarify notice rules. Spell out how notices must be delivered and keep proof of delivery.
- Define escrow release conditions. State that funds are released only with a mutual written release, court order, or at closing.
- Tighten the loan contingency. Use clear language that defines what lender documentation is needed if financing fails.
- Use a sale-of-home contingency carefully. Add firm deadlines so the seller has confidence, and you have a safety net.
Practical checklist
Follow this quick list to keep your deposit safe and your offer strong.
Before you make an offer
- Get a lender preapproval and understand your loan timeline.
- Discuss local earnest money norms with your Hot Springs agent.
- Keep funds liquid so you can deposit within the contract deadline.
When writing the contract
- Fill in the earnest money amount and the named escrow holder.
- Set a clear deposit deadline and delivery method.
- Include inspection, financing, appraisal, and title contingencies with firm timelines.
After acceptance
- Deliver your deposit on time and get a written receipt from escrow.
- Schedule inspections right away to avoid bottlenecks.
- Send any cancellation or objection notices in writing and before deadlines.
If a dispute arises
- Keep copies of all communications, receipts, and lender letters.
- Ask the escrow holder to keep funds in place until both sides sign a release or a dispute process resolves it.
- Consult your agent and, if needed, a South Dakota real estate attorney.
Common mistakes to avoid
Stay away from these pitfalls that can put your deposit at risk:
- Missing a notice deadline for inspections or financing.
- Walking away without a contract-approved reason.
- Failing to provide required lender documentation when financing falls through.
- Relying on verbal side agreements instead of written addendums.
- Delaying inspections and running out the clock.
The bottom line for Hot Springs buyers
Earnest money shows sellers you are serious and helps your offer stand out. In Hot Springs and across the southern Black Hills, a balanced deposit is common, often in the range of $1,000 to $5,000 for modest homes and 1 percent to 3 percent for mid-priced homes. The key is crafting a clean contract with clear timelines and contingencies so your deposit stays protected while you compete.
If you want local guidance tailored to your price point and timeline, connect with a trusted Hot Springs broker who knows how to structure offers in this market. Reach out to Joel Hawkins to talk through your plan and schedule a free consultation.
FAQs
How much earnest money is typical in Hot Springs?
- Many modest-priced homes see deposits between $1,000 and $5,000, while mid-priced homes often fall around 1 percent to 3 percent of the price.
When is earnest money due in South Dakota purchase contracts?
- Most contracts require delivery within 24 to 72 hours after both parties sign, but your agreement controls the exact timing.
Who holds my earnest money in Hot Springs?
- A local title company or a brokerage trust account typically holds the funds in escrow as named in your contract.
Is earnest money applied to my costs at closing?
- Yes, if the transaction closes, the deposit usually goes toward your down payment or closing costs as a credit on your settlement statement.
Can I lose my earnest money if I cancel the deal?
- You can forfeit the deposit if you cancel for a reason not covered by your contract, or if you miss required deadlines or notice steps.
What contingencies help protect my deposit in South Dakota?
- Inspection, financing, appraisal, and title contingencies are common protections, plus a sale-of-home contingency when needed.
I am using VA or FHA financing. Does that change the deposit?
- The amount is mostly driven by local custom and competitiveness, but your lender will require documentation of the funds and how they were sourced.
What happens if the seller and I disagree about who gets the deposit?
- The escrow holder will usually keep the funds until both sides sign a release or a court or dispute process instructs disbursement, as outlined in the contract.
