Shopping in Hernando and also eyeing Collierville or Arlington? Earnest money works similarly on both sides of the Mississippi–Tennessee line, but small differences in competition, timing, and paperwork can affect your budget and peace of mind. You want to make a strong offer without risking your deposit. In this guide, you’ll learn how much to budget, when the deposit is due, and how contingencies protect you in northern Mississippi and nearby Tennessee. Let’s dive in.
Earnest money basics
Earnest money is a buyer’s good‑faith deposit that shows you intend to purchase the home. You and the seller agree to it in the purchase contract; there is no law that sets the amount. The money is placed in an escrow or trust account with a brokerage, title company, or closing attorney until closing or a contract termination.
If you close, your earnest money is applied to your cash to close. If you default without a contract‑approved reason, you may forfeit the deposit to the seller. Refunds and forfeiture are always governed by the written contract and the state’s escrow handling rules for brokers and title companies.
For general background on how EMDs work nationwide, you can review buyer guidance from the National Association of REALTORS, which explains how deposits are held and applied at closing. You can find those resources by searching the consumer pages at the National Association of REALTORS site.
Typical amounts: MS vs TN
Across the U.S., a common rule of thumb is roughly 1 percent of the purchase price, but the actual amount depends on local competition. In Hernando and greater DeSoto County, plus nearby Shelby County communities like Collierville and Arlington, here’s what you can expect:
- Entry to mid‑price homes: $1,000 to $5,000 is common.
- Lower‑priced homes under $200,000: $500 to $2,000.
- Homes $200,000 to $500,000: $1,500 to $7,500, depending on competition.
- Competitive or higher‑priced listings: 1 to 2 percent of the purchase price, sometimes more in tight seller markets.
Collierville and some parts of Shelby County often run more competitive with higher median prices than parts of DeSoto County. In those neighborhoods, buyers frequently increase earnest money to stand out. Plan to budget at least a few thousand dollars in Hernando and be ready to go higher in Collierville or Arlington when inventory is tight.
For local market context and trends, check resources from Greater Memphis REALTORS.
When and where you pay
Your purchase contract will name the escrow holder, which can be the buyer’s or listing broker, a title company, or a closing attorney. The contract controls exactly where funds go and who is responsible for safeguarding them.
Timing is fast. Most local contracts require you to deliver the deposit within 24 to 72 hours or within a set number of business days after both parties sign. If you miss the delivery deadline, the seller may have the right to cancel or treat it as a buyer default, so plan your logistics before your offer is accepted.
Both Mississippi and Tennessee require brokers and title companies to promptly deposit and account for trust funds. You can learn more about standard forms and escrow practices on the state association sites for Mississippi REALTORS and Tennessee REALTORS.
Contingencies that protect you
Contingencies give you a way to cancel under stated conditions and get your earnest money back when you follow the contract rules and timelines. Common protections include:
- Inspection contingency: You usually have 5 to 10 business days to inspect and respond. If you cancel within the inspection period per the contract, you typically receive a refund.
- Financing contingency: If you cannot obtain loan approval within the agreed time and you give timely written notice, you generally receive a refund.
- Appraisal contingency: If the appraisal comes in below the contract price and you choose to cancel per the appraisal clause, the deposit is usually refunded.
- Title contingency: Unresolved title issues or unacceptable exceptions can allow you to cancel and recover your deposit.
- HOA document review: Where applicable, you may cancel within the review window if documents reveal issues you do not accept.
To keep your deposit safe:
- Follow every deadline in writing. Use the notice method the contract requires.
- Keep documentation such as inspection reports and lender letters.
- Ask for extensions in writing before a deadline expires if there are delays.
- Confirm where the funds are held and request a deposit receipt.
If there is a dispute about who gets the money, the escrow holder usually needs a written agreement from both parties or a final decision through mediation, arbitration, or court before releasing funds.
Suggested timelines to expect
Every offer is unique, but these ranges are common in our region. Your agent will tailor timing to the home and the market environment.
- Earnest money delivery: within 24 to 72 hours after contract ratification.
- Inspection period: 5 to 10 business days. Shorten if you need to be more competitive or lengthen if property conditions suggest it.
- Financing approval: 21 to 30 days, depending on your lender and loan type.
- Appraisal deadline: often within 7 to 14 days of loan application or as coordinated with the financing timeline.
- Title commitment review: 7 to 14 days after the title order.
- Closing window: typically 30 to 45 days from contract acceptance.
These timelines are influenced by lender speed, appraiser availability, and title complexity. Communicate early and often if any delay might affect a deadline.
Cross‑border differences
When you buy in Tennessee, offers typically use Tennessee REALTORS forms and title practices. When you buy in Mississippi, you will see Mississippi REALTORS forms and local practices. The size of the earnest money is always negotiable, but delivery windows, notice methods, and contingency language can differ.
- Forms and deadlines: TN and MS forms may define time periods and delivery methods differently. Read the exact clocks and follow them.
- Who holds the deposit: Either a broker, a title company, or a closing attorney can hold funds in both states. Your contract will name the escrow agent.
- Release procedures: Refunds or forfeiture follow the written contract, and escrow agents hold funds until both parties agree in writing or a dispute resolution process ends.
If you plan to shop both Hernando and Collierville, make sure your offer strategy, deposit amount, and deadlines match the specific state forms in play.
Special risks to avoid
- Wire fraud: Criminals target real estate closings with fake wiring instructions. Always verify wire details directly with your title or closing agent using a known, confirmed phone number. Do not rely on email alone. Review the FBI’s consumer warning on business email compromise and real‑estate wire fraud.
- Disputes over release: If buyer and seller disagree about who gets the deposit, funds can sit for weeks or months. Build in clear deadlines, send timely notices, and keep records to reduce risk.
- New construction or distressed sales: Builder, short‑sale, or foreclosure contracts often use different deposit structures and refund terms. Read those contracts carefully and ask questions before you sign.
For a plain‑language overview of the closing process and consumer protections, the Consumer Financial Protection Bureau is a helpful resource.
Smart budgeting tips
Your earnest money is part of your overall cash to close, but you will also have other upfront costs. Plan ahead so your deposit does not strain your budget.
- Set aside $2,000 to $7,500 for many Hernando and DeSoto County offers. In Collierville or competitive price points, prepare for 1 to 2 percent of the purchase price.
- Keep earnest money separate from inspection fees, appraisal fees, and moving costs.
- Confirm with your lender that your earnest money will be credited on your closing disclosure.
- Line up your earnest funds before you write the offer so you can deliver within 24 to 72 hours if accepted.
Ready to plan your offer?
A strong, well‑timed earnest money deposit can help you win the home while keeping your funds protected under the contract. If you are comparing Hernando with Collierville or Arlington, we will walk you through the right deposit amount, timelines, and contingency strategy for each specific property.
Have questions or want to talk through a plan for your next offer? Schedule a Consultation with Deanna Wardlaw for cross‑border guidance tailored to northern Mississippi and nearby Tennessee suburbs.
FAQs
How much earnest money do I need in Hernando?
- For many homes in DeSoto County, plan on $1,000 to $5,000. For higher‑priced or competitive homes, 1 to 2 percent of the purchase price can help your offer stand out.
When is earnest money due after my offer is accepted?
- Most local contracts require delivery within 24 to 72 hours or within a few business days after ratification. Your contract will specify the exact deadline.
Who holds my earnest money in MS and TN?
- The contract names the escrow holder, which can be a brokerage, title company, or closing attorney. Funds must be handled in regulated trust accounts in both states.
Can I get my deposit back if the inspection finds issues?
- Yes, if you terminate within the inspection period and follow the contract’s notice rules. Keep everything in writing and on time.
What happens if my financing falls through?
- If you have a financing contingency and notify the seller within the agreed timeframe, you typically receive your earnest money back.
Is my earnest money part of my down payment at closing?
- Yes. Your deposit is usually applied to your cash to close and will appear as a credit on your closing documents.
