If you have ever stared at a contract from a cash home buyer and wondered why the earnest money line looks thin or blank, you are not alone. The traditional playbook says buyers put down earnest money to show they are serious. Cash investors often tweak that playbook, sometimes with tiny deposits or none at all. That variation can make sellers uneasy, especially if the goal is to sell my house fast without stepping into a legal puddle.
I have sat on both sides of these deals and coached plenty of sellers through them. The short answer: earnest money is not legally required in many states, and even where consideration is required to form a contract, it does not have to be a cash deposit labeled “earnest money.” That said, the presence, size, and handling of earnest money still matters. It affects leverage, timelines, and your escape routes if the buyer goes quiet. Here is how to think about it when working with we buy houses for cash buyers, plus the levers you can pull to protect yourself without scaring off legitimate investors.
Why earnest money exists in the first place
In a conventional sale, earnest money does two things. First, it signals commitment. A buyer places a deposit with the title company or attorney, usually within a few days of contract signing. Second, it becomes a remedy. If the buyer walks away without a valid reason under the contract, the seller may keep the deposit as liquidated damages.
In most markets, typical earnest money ranges from 1 to 3 percent of the purchase price. In hot neighborhoods or with multiple offers, you might see higher. With an all-cash deal from an investor, you might see 500 dollars, 1,000 dollars, or occasionally nothing at all. Cash buyers argue that speed and certainty replace the need for a big deposit. Sometimes they are right. Other times, a slim deposit accompanies a contract stuffed with contingencies and long inspection periods that drain your momentum.
The point of earnest money is not to punish, but to create alignment. It gives the buyer a reason to keep moving and gives the seller a defined remedy if they don’t.
Are earnest money deposits required with we buy houses for cash deals?
Legally, most states require “consideration” to form a binding contract, but that consideration can be a promise to perform, not necessarily a separate deposit. In practice, the real estate industry treats earnest money as the tangible proof of that promise. Title companies and attorneys know how to hold it, account for it, and disburse it if the deal falls apart. So while the law might not demand it, the mechanics of a smooth closing often benefit from it.
The cash investor world is diverse. You have:
- Well-capitalized firms that buy, renovate, and hold or flip dozens of homes each year. They usually put real money down and can close in 7 to 14 days because they have funds and relationships ready. Wholesalers who contract to buy your property, then assign the contract to someone else for a fee. Some are excellent. Others overpromise. They often negotiate for minimal earnest money because they do not intend to close themselves and want minimal risk if they cannot find an assignee.
That mix explains why you see such a wide range of deposit practices. The key is not whether an earnest deposit is theoretically required, but whether you have enough leverage and clarity in the contract to ensure performance.
How much is reasonable, and when should it be deposited?
In investor deals I trust, I see deposits from 1,000 to 5,000 dollars on lower-priced homes, and 1 to 2 percent on midrange properties. For a 300,000 dollar house, 3,000 to 6,000 dollars is common with serious cash buyers. For a 90,000 dollar rental or distressed property, 1,000 to 2,000 dollars can be fine. Ultra-low deposits, like 100 dollars, are more common when the buyer is a wholesaler, the property is heavily distressed, or the buyer expects to take on unusual risk.
Timing matters as much as size. The deposit should land with a reputable third party, typically the title company or closing attorney, within two to three business days of contract execution. If the buyer insists on holding it themselves, or asks you to hold it, or delays funding more than a week, that is a red flag. Fast deposit equals intent.
Do small or zero deposits always mean trouble?
Not always. I have closed clean, fast deals with 1,000 dollar deposits where the buyer delivered everything else on time. The rest of the file was strong: no financing contingency, a short inspection timeline, title order opened immediately, proof of funds matched the purchase price plus closing costs, and the closing date was written as a fixed date, not a floating window.
On the other hand, a contract can have a large deposit and still waste your time if the buyer piles on contingencies or negotiates open-ended inspection periods. If the inspection paragraph says 30 days, with automatic extensions for contractor access, you might be granting a month-long option to back out. Look at the entire package.
The anatomy of a cash investor contract
The we buy houses for cash contract is often shorter than the state realtor form, but those two pages can carry hidden complexity. Read these sections carefully:
Purchase price and credits. Make sure any repair credits or prorations are spelled out. If the contract says “price net to seller after fees,” define those fees.
Earnest money. Amount, due date, and who holds it. Make sure disbursement terms are clear if the buyer defaults.
Inspection and access. Inspection periods between three and ten days are common for cash home buyers. Longer than ten days begs a question: why does an all-cash buyer need that much time? Ensure access expectations are reasonable if the property is occupied.
Title and closing. The buyer usually picks the title company in investor deals. That can be fine if the title agent is reputable. If you have a trusted attorney or title company, try to name them. Require the title order to be opened within 24 to 48 hours.
Assignment. This single line tells you whether the buyer can sell their contract to someone else. “Assignable” allows it. “Not assignable” prevents it. Middle ground clauses allow assignment only to an entity controlled by the buyer. If you are comfortable with assignment but want accountability, require the assignee to assume all obligations and increase the deposit upon assignment.
Financing and appraisal contingencies. The banner promise in we buy houses for cash is no financing contingency. Make sure the contract does not sneak one back in under another label such as “partner approval” or “capital partner review.”
Closing date and extensions. Define a firm date or a short window. Limit extensions to specific causes, like title curative issues, not “market conditions” or “additional due diligence.”
Default and remedies. This is where your leverage lives. If the buyer defaults for reasons not allowed in the contract, the earnest money should be released to you, and the contract should state it plainly.
Proof of funds matters more than slogans
Any buyer can say we buy houses. Proof takes the shape of a bank statement, a letter from a private lender with your property address and available balance, or a verifiable line of credit statement. Screenshots with names blacked out do not help. Ask for a recent statement showing sufficient funds for purchase price and closing costs. If they plan to use a hard money loan, request the lender commitment and verify that the buyer’s required cash at closing is available.
If a buyer pushes back with “we never share that,” consider whether their silence is worth your calendar time. Serious buyers know sellers need to see capacity.
If the deposit is small, tighten the other controls
A modest deposit can work if the rest of the contract buy houses for cash holds the buyer to a tight rhythm. These are the levers I use when selling to cash home buyers:
- Short inspection window with automatic expiration. Three to seven days, after which the deal becomes nonrefundable except for title issues. Incremental deposit increases. If the buyer wants a 10-day inspection, ask for an additional nonrefundable deposit on day five. Assignment controls. Either prohibit assignment or require assignee acceptance in writing and a deposit bump at assignment. Title milestones. Title order opened within 48 hours, buyer to deliver closing documents by a date certain, and a set closing date rather than “on or before” without context. Remedies spelled out. Include a clause directing the title company to release the deposit to the seller upon buyer default, without mutual consent, if the contract conditions are met.
Those five items together can make a 1,000 dollar initial deposit adequate. They also flush out unserious players quickly since they cannot rely on endless extensions.
Wholesalers, assignments, and how to structure risk
Assignments are not inherently bad. Plenty of sellers close happy with an assignee who brings cash and finishes on time. The problem is when your original buyer overestimates the spread and cannot find a taker, then drags the timeline. To reduce that risk, you can do one of three things.
Allow assignment with conditions. The assignee must be identified in writing within a set number of days. Require a nonrefundable deposit increase upon assignment. Add a line that the original buyer remains jointly liable.
Limit assignment to related entities. The buyer can assign only to an entity they control, or for financing or title purposes. That still gives them flexibility for their corporate structure but prevents a wholesale flip.
Prohibit assignment entirely. Some investors will walk from a no-assignment rule, which can be useful signal. If your property is in high demand, you can hold the line.
I have seen deals survive a last-minute assignment that actually improved quality because the end buyer was a local rehabber with a strong relationship with the title office. I have also seen a deal with a generous inspection period and assignable terms stall for 45 days without honest updates. The difference was the structure and the enforcement language.
When a zero-dollar deposit can still work
There are rare cases where you might accept no earnest money. If the buyer is a known quantity in your area, closes five or more deals a month, and can close within seven days, you might trade deposit size for velocity. You can also substitute other forms of commitment:
A nonrefundable option payment. Instead of earnest money, the buyer pays a small option fee that is immediately nonrefundable and applies to the price. This is functionally similar to nonrefundable earnest money, though terminology varies by state.
A right to show during inspection only. Allow the buyer to market the property for an assignment, but only within the short inspection window. After that, they are locked in.
Seller choice of title or attorney. If you can pick the closing professional, you gain control over communication and trust the escrow rules.
Document access expectations. If the house is occupied or needs coordination for entry, lay out dates and times in the contract so there is no friction or delay.
Even then, consider at least a nominal deposit. It makes accounting cleaner, and it sets a default remedy.
How to balance speed with safety when you need to sell fast
The cash buyer pitch leans on speed. It is compelling when you are behind on payments, relocating, facing probate, or dealing with a property that needs more repair than you can manage. To keep that speed while protecting yourself, keep the process plain and front-loaded:
Get proof of funds before signing or within 24 hours. Do not wait a week to verify the buyer can perform.
Demand the deposit within two business days. Have the title company confirm receipt in writing.
Keep the inspection period short and finite. Five business days is plenty for investors to walk a property, pull repair numbers, and confirm title needs.
Choose a reputable closing professional. If the buyer insists on a title company you do not know, do your homework. Call and ask how they handle disputes, defaults, and disbursements.
Write the calendar into the contract. Set a closing date with specific extension conditions. If title issues arise, extensions should be tied to documented curative work, not vague buyer discretion.
I once sold a rental to a regional firm that does a dozen purchases a month. We did a 2,500 dollar deposit on a 210,000 dollar price, five-day inspection, and a 14-day close. They delivered funds on day 13. The contract never flexed because we kept timelines tight and paperwork clear. That is what a smooth investor closing feels like.
Red flags that deserve a second look
Investors who buy many houses know how to answer questions and provide documents. If the conversation gets slippery, pause. Common tells include:
- A deposit that will be “dropped off later” with no date. Or the buyer wants to hand you a check personally rather than deposit with the title company. Inspection periods longer than 10 business days for a straightforward single-family home, paired with broad escape language like “partner approval.” Refusal to provide proof of funds or a lender letter that references your property and the funding amount. A request to file a memorandum of contract against your title before the deposit clears, which can cloud your ability to resell if the deal falls apart. An assignment-first stance where the buyer is marketing your property publicly before they have even opened title or visited the house.
None of these automatically kill a deal, but each deserves a fix in the paperwork before you sign.
Regional quirks worth noting
Real estate is local, and the earnest money norm shifts across markets:
Title vs. attorney states. In attorney states, escrow and disbursement rules can be stricter, which helps sellers when enforcing deposit releases. In title states, make sure the chosen title company has a reputation for following the purchase contract precisely.
Customary who-pays-what. In some markets, the buyer routinely pays title insurance, in others the seller does. That affects net proceeds and can be traded for a stronger deposit.
Local wholesaling laws. A few jurisdictions are tightening regulations around wholesaling. If your buyer is assigning, ask whether they are licensed if your state requires it, and confirm they follow state advertising rules.
Seasonality and competition. In spring and early summer, investor pipelines are busy. Good buyers still perform, but timelines can stretch a few days. Around holidays, closings can bunch up due to office closures. Build a small cushion around long weekends.
What a fair, seller-friendly cash contract looks like
Imagine you are selling a 160,000 dollar property that needs work. You want to move quickly and avoid a long list of repairs. A credible cash home buyer offers 150,000 dollars. If I were advising you, I would push for these essentials:
Earnest money of 2,000 to 3,000 dollars, deposited with a named title company within two business days.
Inspection period of five business days, after which the deposit becomes nonrefundable except for title defects.
No financing or appraisal contingency. No “partner approval” language. Assignment allowed only to an entity controlled by the buyer, with a deposit increase upon assignment.
Title order opened within 48 hours, with the title company emailing both parties a file number and timeline. Closing in 14 days, with one seven-day extension only for documented title curative work.
Default language that instructs the title company to release the deposit to the seller if the buyer fails to close after the inspection period and not due to title issues.
A short paragraph granting reasonable access for inspections and photos during the inspection window, scheduled through you or your representative.
That set of terms typically protects your time without chasing away serious investors.
Negotiating tactics without burning goodwill
Cash buyers value clarity and speed as much as you do. When you ask for a stronger deposit or tighter timelines, tie the request to your commitment to cooperate. Offer fast access and quick responses in exchange for clear performance milestones. If you are comfortable, you can trade a slightly lower price for nonrefundable deposit language once the inspection period ends. That trade often puts more money in your pocket than a higher headline price that lingers and dies.
When a buyer objects to a deposit increase, suggest a stepped approach: 1,500 dollars at signing, another 1,500 dollars nonrefundable after day three of inspection. If they balk at both, revisit the closing timeline. Shorten it. The less time at risk, the smaller the deposit needs to be.
When to walk away
Time is part of your net proceeds. If a deal chews up three weeks and falls apart, you lose calendar and leverage. Walk if the buyer refuses to deposit on schedule, will not show proof of funds, wants a 21-day inspection for a simple property, or insists on filing a memorandum of contract before funding escrow. If your gut says you are being managed, you probably are.
There is a robust ecosystem of cash investors. The we buy houses space includes pros who close cleanly and pay fair prices for the speed and convenience they provide. If one buyer will not meet basic standards, another often will.
A quick seller’s checkpoint you can run every time
- Proof of capacity. Bank statement or lender letter that references your property and shows enough to cover purchase and costs. Earnest money details. Amount, who holds it, deposit due date, and disbursement instructions. Inspection and exit paths. Short window, clear reasons the buyer can cancel, nonrefundable terms after the window. Assignment boundaries. Either restricted or tied to deposit increases and joint liability. Calendar and communication. Title opened within 48 hours, firm closing date, named closing professional, and explicit extension conditions.
If your contract hits those five marks, the deposit number becomes one variable in a much sturdier equation.
Final thought from the trenches
Earnest money deposits are a tool, not a trophy. In cash investor deals, they might look smaller than you expect, and sometimes that is fine. What matters is alignment. A buyer who funds a reasonable deposit quickly, provides proof of funds, keeps inspection brief, and respects the calendar is signaling the same thing a big deposit signals in a traditional sale. You are selling certainty as much as a house. Set the structure right, and the certainty shows up on closing day in the form of wired funds, keys on the table, and a clean slate for your next move.