Putting in an offer on a Kennebunkport home and wondering how earnest money works? In a coastal, second‑home market like Kennebunkport, deposits can feel high and the rules unfamiliar, especially if you are buying from out of state. This guide shows you how much to expect, who should hold your funds in Maine, the contingencies that protect you, and smart ways to structure your offer. Let’s dive in.
Earnest money basics
Earnest money is your good‑faith deposit that signals to a seller you are serious. If the sale closes, that deposit is credited to your down payment or closing costs. If you default without a contract protection, the seller may seek to keep the deposit as damages, depending on the purchase agreement. Most contracts require you to deliver the deposit within 24 to 72 hours after all parties sign, so watch that deadline closely.
Typical deposit sizes in Kennebunkport
Across the United States, a 1 to 3 percent deposit is common, and higher deposits can strengthen an offer in competitive markets. This baseline is consistent with NAR consumer guidance on earnest money. In Kennebunkport, you will see more variability by location and price. In routine in‑town sales, 1 to 3 percent is typical, while premium waterfront or fast‑moving listings often see 3 to 5 percent, sometimes more for luxury properties.
Out‑of‑state and second‑home buyers sometimes offer larger deposits to stand out. Balance that strategy with strong protections, such as inspection and financing contingencies. For current local context, you can also review resources from the Maine Association of REALTORS.
Who holds your deposit in Maine
In Maine, earnest money is commonly held in an escrow or trust account by one of three parties: the listing or buyer’s brokerage, a title company or closing agent, or a real estate attorney. Brokers must follow state rules for client funds and trust accounts. You can verify licensing and trust account rules through the Maine Real Estate Commission.
Take these steps to protect yourself:
- Get a written receipt immediately that shows amount, date, payer, payee, and where the funds are held.
- Confirm the type of account, and whether the funds are interest‑bearing. If interest is paid, confirm who receives it.
- Make sure the purchase agreement names the escrow holder and outlines the release conditions for the deposit.
Key contingencies to protect you
Certain contingencies are standard and should be included unless you have a clear reason to waive them:
- Inspection contingency. Time to complete a general inspection and order specialists as needed. Typical periods are 7 to 14 days, sometimes longer for septic or survey work.
- Financing contingency. Protects you if your mortgage is not approved.
- Appraisal contingency. Ties financing to the property appraising at or above the purchase price.
- Title contingency. Allows you to review the title report and require cure of defects.
- Survey or boundary review. Helpful for village lots and important for waterfront properties.
- Septic or sewer contingency. Many coastal homes use septic systems. Build in adequate time to evaluate.
Financing commitments often take 21 to 30 days, depending on lender and property type.
Waterfront checks buyers should add
Waterfront and coastal properties in Kennebunkport require additional due diligence. Consider these checks during your contingency window:
- Flood risk and insurance. Review your property’s flood zone using FEMA flood resources and request an elevation certificate if available. Get flood and homeowners insurance quotes early.
- Shoreland zoning and permits. Confirm setbacks, permitted uses, and any approvals for docks, piers, seawalls, or site work with the Town of Kennebunkport planning and permitting office and the Maine DEP.
- Dock and riparian rights. Verify ownership, permits, and maintenance responsibilities. Ask for documentation of any recent violations or permit renewals.
- Coastal erosion and storm history. Ask for records of shoreline change or repairs, and evaluate the condition of erosion control measures.
- Septic and well. Require inspection, pumping records, and compliance checks. The EPA’s septic guidance is a helpful primer on system basics.
- Older building systems. Consider inspections for oil tanks, electrical, chimneys, and potential lead paint in pre‑1978 homes.
Timing and release of funds
The contract should clearly state when you must deliver the deposit and who holds it. If the sale closes, the earnest money is credited to you at settlement. If you terminate within a valid contingency period, the deposit is typically returned according to the contract.
If a buyer defaults without contractual protection, a seller may seek the deposit as liquidated damages if that clause is in the agreement. Escrow holders usually require written authorization from both parties to release funds. If there is a dispute, funds often remain in escrow until the parties reach agreement or a court or arbitrator orders release.
Reduce risk with smart structure
You can keep your offer strong while limiting exposure:
- Consider staged deposits. Start with a modest amount at contract, then add a second deposit after inspections are complete.
- Do not waive key contingencies lightly. They are your path to a refund if serious issues arise.
- Match deposit size to risk. Higher deposits can help you win, but only if your protections and timelines are clear.
- Tighten the contract language. Name the escrow holder, account type, delivery deadlines, and release conditions. Define what counts as a default versus a permitted termination.
- If you are unsure, engage a local real estate attorney to review escrow and release terms before funds are delivered.
Buyer checklist
- Confirm who will hold the deposit and in what type of trust or escrow account. Ask for a written receipt.
- Choose a deposit amount that balances competitiveness with risk.
- Build in contingencies: inspection, financing, appraisal, title, survey, septic, and flood or shoreland review where applicable.
- Order flood and insurance quotes early. Request an elevation certificate if available.
- Schedule specialized inspections for septic, docks or piers, and any coastal structures. Allow time for surveys or permit research.
- Verify release language and dispute procedures in the contract.
- Coordinate logistics if you are remote. Use your Maine team to schedule inspections and monitor escrow.
Buying in Kennebunkport should feel exciting, not stressful. With the right deposit strategy, clear contingencies, and a disciplined process, you can compete confidently and protect your funds from contract to closing. If you want a seasoned local partner to guide every step, connect with Cindy Gannon for a thoughtful, high‑touch approach to Maine coastal real estate.
FAQs
How does earnest money work in Kennebunkport offers?
- It is a good‑faith deposit delivered shortly after contract, held in escrow, then credited to you at closing or returned if you terminate under a valid contingency.
How much earnest money should I offer in Kennebunkport?
- Many buyers start at 1 to 3 percent, with 3 to 5 percent common on competitive or waterfront listings, balanced by strong contingencies and clear timelines.
Who should hold my deposit in Maine?
- A named escrow holder such as a licensed brokerage, title company, or attorney, with written receipt and account details referenced in the contract.
Can I get my deposit back after a failed inspection?
- Yes, if you terminate within the inspection contingency period and follow the contract steps for notice and release.
What if the seller will not sign the release for my deposit?
- The escrow holder generally needs signed instructions from both sides or a court or arbitration order, so unresolved disputes often require legal resolution.
