Earnest money is one of those parts of a real estate contract that most buyers write into the offer without fully understanding. On the Grand Strand, where transactions often involve out-of-state buyers, competitive offers, and time-sensitive closings, how earnest money is handled affects both the strength of an offer and the buyer's downside if something goes wrong. Below is a practical guide to how earnest money actually works in South Carolina.
What Earnest Money Is
Earnest money is a good-faith deposit the buyer commits to when the offer is accepted.
The Basic Function
Earnest money signals to the seller that the buyer is serious. It is typically held by the closing attorney or a broker's escrow account and applied toward the purchase at closing, or forfeited under specific circumstances if the buyer walks away outside their contingency protections.
Where the Money Goes
South Carolina practice is for earnest money to be held in an attorney's or broker's escrow account, not by the seller. This protects both sides.
How Much Earnest Money Buyers Typically Offer
Common ranges vary by market conditions and price point.
Typical Amounts
Grand Strand earnest money commonly runs 1 to 3 percent of the purchase price, though it can be higher on competitive offers or on higher-price properties. Cash buyers often offer larger deposits to signal strength. For background, see our blog on why more buyers are choosing cash purchases on the Grand Strand.
Higher Earnest Money as a Competitive Tool
In competitive situations, meaningfully higher earnest money can strengthen an offer. Sellers read strong deposits as reduced risk of the deal falling apart. For background, see our blog on how to win in a multiple-offer situation on the Grand Strand.
When Earnest Money Is Refundable
The refundability depends on contract contingencies.
Within Contingency Windows
If the buyer terminates during an active inspection, financing, appraisal, or other contingency period for a legitimate reason, earnest money is typically refundable. For background, see our blog on understanding buyer contingencies in South Carolina contracts.
Outside Contingencies
If the buyer walks away after contingency periods without a legitimate reason, the seller may be entitled to keep the earnest money. This is where buyers who did not understand the contract sometimes lose meaningful sums.
Deal Failing Through Seller Fault
If the deal fails because the seller cannot deliver clear title or breaches the contract, earnest money is generally returned to the buyer.
How Earnest Money Interacts With Waived Contingencies
Waiving contingencies increases the earnest money risk.
Financing Waivers
A buyer who waives the financing contingency to compete may lose earnest money if their loan falls through. Only buyers with truly secure financing should consider this move.
Inspection Waivers
Waiving inspection means the buyer accepts the property condition. Post-inspection surprises no longer support terminating without losing earnest money.
Appraisal Waivers
A buyer who waives appraisal agrees to make up any shortfall. Walking away because the appraisal came in low may cost the earnest money.
Best Practices for Buyers
Handling earnest money well protects the buyer.
Wire Fraud Discipline
Never wire earnest money based on emailed wire instructions without verifying with the escrow holder by phone using an independently confirmed number. Wire fraud is the single biggest earnest money risk.
Get Receipts
Confirm in writing that the earnest money has been received and deposited into the correct escrow account.
Track Contingency Deadlines Carefully
Missed deadlines convert protected earnest money into at-risk earnest money.
Do Not Send Money to Sellers Directly
Earnest money should go to the closing attorney or broker escrow account, not the seller. Any request to wire the deposit to a personal account is a red flag.
Best Practices for Sellers
Sellers should evaluate earnest money as part of offer strength.
Read the Whole Offer
Deposit size is one signal. Financing strength, contingency structure, and buyer motivation matter alongside earnest money.
Push for Meaningful Deposits in Competitive Situations
In multiple-offer situations, sellers can specifically request higher earnest money as a way to select the strongest offer.
Understand Your Rights on Buyer Default
South Carolina practice provides paths for sellers to claim earnest money when buyers default outside contingencies. Your closing attorney can walk through the specifics. For background on the closing process, see our blog on how closing costs work in South Carolina.
What Happens to Earnest Money at Closing
The mechanics at closing are clean.
Applied to Closing Costs and Purchase
Earnest money is credited toward the buyer's total amount due at closing. It effectively becomes part of the down payment or cash to close.
Handled Through the Closing Statement
The closing statement documents the earnest money credit clearly. Both sides see the accounting.
Key Takeaways
- Earnest money is a good-faith deposit typically running 1 to 3 percent of purchase price on the Grand Strand
- The deposit is held in escrow by the closing attorney or broker, never sent directly to the seller
- Refundability depends on contingency structure; waiving contingencies increases earnest money risk
- Wire fraud is the single biggest earnest money risk and requires phone-based verification of every wire instruction
- Earnest money is credited toward the buyer's amount due at closing
Handled well, earnest money is a simple, effective tool that keeps both sides committed to the transaction. Handled poorly, it can become a source of surprise and financial loss. Understanding the mechanics makes both buyers and sellers better prepared.
About Greg Harrelson
Greg Harrelson is a seasoned Realtor® with more than 30 years of experience serving the Myrtle Beach and Grand Strand markets. As the founder of Century 21 The Harrelson Group, Greg has built his career helping buyers, sellers, and investors achieve success in every corner of the coastal Carolina real estate market. His expertise spans residential homes, investment properties, land development, and coastal condos. Known for his deep local knowledge, innovative marketing strategies, and commitment to personal service, Greg consistently helps clients reach their real estate goals while navigating the ever-changing market with confidence and precision.