Earnest Money in Oklahoma: A Key to Successful Real Estate Contracts

When diving into the Oklahoma real estate market, you’ll quickly encounter the term “earnest money.” In fact, it’s on the very first page of our residential Real Estate contract. It’s a crucial part of the home-buying process that is often overlooked and underemphasized. Many buyers and sellers (and Real Estate Agents, for that matter) don’t give earnest money more than a passing thought. Yet, it serves as both a protective measure and a display of serious intent for the parties involved. Let’s break down what earnest money is, why it matters, and how it plays a role in the Oklahoma Real Estate contract process.

What Is Earnest Money?

Earnest money is the buyer’s upfront deposit into a third-party escrow or trust account, typically held by a title company or the listing broker. Think of it as the buyer’s “skin in the game” or their “good faith deposit.” This deposit reassures the seller of the buyer’s commitment to the transaction.

When a buyer submits earnest money, they’re saying, “I’m so serious about buying your home that I’m willing to put my hard earned money on the line.” In exchange, the seller agrees to take the property off the market, putting their trust in the buyer to follow through with the transaction.

How Much Earnest Money Do You Need in Oklahoma?

In Oklahoma, it’s common for buyers to deposit about 1% of the purchase price as earnest money. For example:

• On a $300,000 home, you can expect to provide around $3,000.

However, there are no strict legal rules about how much earnest money must be provided. This flexibility allows buyers to make strategic decisions. In competitive markets, offering a larger or even non-refundable deposit can help your offer stand out. A seller may favor an offer with substantial earnest money because it signals a high level of commitment. On the other hand, we have seen many contracts with laughably low offers of earnest money. This can indicate that the buyer isn’t very serious, is poorly informed, or is willing to walk away from a $500 loss of earnest money if the contract goes off the rails. Having a strong Realtor in your corner can help avoid these common pitfalls. 

The Earnest Money Timeline in Oklahoma

In the ever-gorgeous State of Oklahoma, here’s how earnest money fits into the contract timeline:

1. Delivery: After the seller accepts the offer, the buyer must deposit the earnest money into the escrow account named in the contract within three days. If this deadline falls on a weekend or holiday, it’s extended to the next business day. Earnest money deposits should be in the form of a personal check, a bank wire or a cashiers check.

2. Inspection Period: The buyer typically has 10 days to complete inspections, unless specified otherwise in the contract. A buyer’s due diligence is generally a Termite Inspection as well as a General Home Inspection. Although specialty inspections can be required if an issue stands out during the home inspection. If major inspection issues arise during this period and cannot be resolved, the buyer can cancel the contract and receive a full refund of their earnest money.

3. Moving Forward: If the buyer accepts the property as-is or negotiates repairs, the inspection window closes. Read that again. If the buyer accepts the property as-is OR submits a TRR (Treatments, Repairs and Replacements Form); the inspection window closes. Once the TRR is negotiated and agreed upon, the contingency surrounding repairs is removed from the table. From this point through the closing table, canceling the contract without a valid contingency (such as financing) often results in the seller keeping the earnest money as compensation for taking their home off the market.

Why Earnest Money Matters to Both Buyers and Sellers

• For Buyers: Earnest money strengthens your offer and shows sellers you’re serious. In competitive situations, offering a higher deposit—or even a non-refundable portion—can help your offer rise to the top. Also, it keeps buyers committed to the contract process due to having skin in the game. Losing earnest money is a pain most buyers will avoid at all costs. 

• For Sellers: It provides financial protection. Outside of repairs and financing, there should be little reason for a buyer to cancel a contract. BUT - If the buyer backs out because they got cold feet, the seller may retain the earnest money as compensation for lost time and opportunities. Going back on the market after getting a few days from closing is a brutal experience. The seller should be compensated for having to do so. A good Realtor will leverage the potential loss of earnest money to keep everyone within contract timelines and moving the process forward. 

What Happens to Earnest Money at Closing?

If everything goes smoothly, earnest money doesn’t disappear into the ether at the closing table. Instead, it’s typically applied toward the buyer’s down payment or closing costs, reducing the amount owed at closing. This will be shown multiple times throughout the contract process. The buyer should see this originally in a Cost Estimate that the Realtor provides when the Contract is first written. As well as for each Counter Offer, change to purchase price or financing concession. Finally, buyers & sellers will see a full financial breakdown from the Title Company in the form of a Settlement Statement. If all the ducks are in a row, then all parties roll on to closing and finalize the deal. Just like that, Earnest Money did it’s job and helped keep everyone in the game. 

Key Takeaways for Oklahoma Buyers and Sellers

Earnest money plays a critical role in Oklahoma real estate transactions, offering protection and clarity for both parties. Here’s what to keep in mind:

• Be prepared to provide 1% (or more) of the purchase price as earnest money.

• Meet all deadlines in the contract to protect your deposit. 

• Use earnest money strategically to strengthen your offer in competitive markets.

Understanding the role of earnest money ensures you’re well-prepared to navigate the real estate contract process, whether you’re buying your dream home or selling to a serious buyer.