Heard people use “escrow” and “earnest money” like they mean the same thing? In Fort Wayne, these two terms show up in nearly every offer and closing, yet they play very different roles. When you understand both, you protect your deposit, keep your timeline on track, and lower stress from contract to keys.
This guide breaks down what each term means, what is typical in Allen County, when you can get your money back, and how to avoid the most common pitfalls and fraud risks. You will also see how this applies to custom builds and higher-end purchases. Let’s dive in.
Escrow vs. earnest money
Escrow is the neutral holding process for funds in a real estate transaction. A third party, such as a title company, escrow agent, attorney, or a broker’s trust account, holds money and releases it only when contract conditions are met.
Earnest money is your deposit that shows the seller you are serious and gives the seller confidence to take the home off the market while the contract moves forward. Your deposit is usually credited toward your down payment or closing costs at closing.
How they relate
You deposit earnest money into escrow. The escrow holder keeps the funds neutral, follows the written instructions in the purchase agreement, and releases the money at closing or earlier if the contract allows. If a contract falls apart, the escrow holder relies on the contract and any signed releases to decide where the funds go.
Two meanings of escrow
Escrow can also refer to the account your mortgage servicer uses for taxes and insurance after you close. That monthly mortgage escrow is separate from the transaction escrow that holds your earnest money before closing.
What is typical in Fort Wayne
In many Fort Wayne and Allen County transactions, you will see:
- Earnest money in the low-thousands range. Amounts like 500 to 5,000 dollars are common on typical single-family homes, with higher price points or multiple offers pushing deposits higher.
- A deposit deadline set by the contract. Common timelines are with the offer, within 24 to 72 business hours after acceptance, or within a few days as negotiated. Your signed purchase agreement controls the deadline.
- A closing window of about 30 to 45 days for conventional financing, depending on lender timelines, title work, and negotiated dates.
Who holds the money
In Allen County, earnest money is most often held by:
- A title or escrow company acting as the neutral holder and closing agent.
- A real estate broker’s trust or escrow account, either the listing brokerage or the buyer’s brokerage, depending on the contract.
The Indiana Real Estate Commission regulates how licensees handle client funds and requires proper trust account procedures. The Allen County Recorder’s office records deeds and mortgages at closing, which is tied to final disbursements from escrow.
When you can get earnest money back
Your purchase agreement sets the rules. Earnest money is usually refundable when you cancel within a valid contingency period and follow the notice steps in the contract. Common contingencies include:
- Home inspection contingency
- Financing contingency
- Appraisal contingency
- Title contingency
- Other negotiated terms, such as a sale-of-home contingency
If you terminate under a covered contingency and meet the deadlines and notice requirements, you typically receive your deposit back.
When you could lose it
You risk losing earnest money when you breach the contract without a valid contingency. Examples include missing deadlines without an extension, cancelling after contingencies expire, or failing to close for reasons not allowed by the agreement. Some contracts treat the earnest money as liquidated damages, while others allow different remedies. The exact outcome depends on the signed contract and, if needed, a resolution process.
Your timeline at a glance
- Offer and acceptance: the contract sets your earnest money amount, who holds it, and when it is due.
- Deposit: you deliver funds to the escrow holder and get a written receipt or confirmation.
- Inspection period: commonly 7 to 14 days, but negotiable. You may negotiate repairs or cancel within the period if you follow the contract.
- Appraisal and financing: your lender orders the appraisal and completes underwriting. You must give any required notices by the dates in the contract.
- Clear to close: the title company prepares the closing statement, and the escrow holder releases funds at recording.
What happens at closing
At closing, your earnest money is credited toward your cash to close. The escrow holder disburses funds according to the final settlement statement when all contract conditions are satisfied and documents are signed. If you paid more than needed, the contract and closing instructions set how any excess is handled.
Documents you should keep
- A dated receipt or escrow deposit confirmation showing the amount, holder, and the property address or contract reference
- A copy of your signed purchase agreement and any addenda or extensions
- Written notices tied to contingencies and responses from the other party
- Any mutual release or settlement instructions if the deal cancels
Keeping a clear paper trail helps resolve questions quickly and protects your deposit.
How to avoid wire fraud
Wire fraud is a real threat in real estate. Protect yourself with these steps:
- Never rely only on email for wire instructions. Call the title company using a verified phone number from an independent source to confirm details.
- Be suspicious of last-minute changes, urgent language, or new account information.
- Confirm wiring instructions in person at the title company when possible.
- Do a test call-back with the escrow officer before sending funds.
If something feels off, pause and verify. A quick phone call can prevent a major loss.
New construction and luxury purchases
If you are building a custom home or buying a higher-end property, you may see larger earnest money deposits, longer build timelines, and builder-specific terms. The deposit could be split between a purchase agreement and builder allowances. Your refund rights, milestone payments, and change-order procedures should all be in writing. Review how the builder or title company will hold funds and what triggers a refund or release.
If a dispute arises
If you and the other party disagree about the release of earnest money, the escrow holder will usually require either a signed mutual release, instructions that match the contract, or a decision from mediation, arbitration, or a court. Start by reviewing your contract, then try to negotiate a written release. If you cannot reach agreement, consult your advisor and consider your dispute resolution clause.
Practical checklist
- Confirm who holds your deposit and the exact due date.
- Use a cashier’s check or verified wire according to the escrow holder’s instructions.
- Get and save a written receipt for your deposit.
- Track contingency deadlines on a shared calendar and give notice in writing.
- Verify wiring instructions by phone before sending any funds.
- Keep copies of all addenda, extensions, and releases.
Next steps
If you are preparing an offer in Fort Wayne or Allen County, align your earnest money with local norms, your price point, and the level of competition. Make sure the contract clearly states who holds the deposit, when it is due, and how it is released. If you are planning a custom build, confirm how deposits and allowances will be handled from the start.
Ready to move forward with a clear plan for escrow and earnest money, plus concierge-level guidance on timelines and contracts? Let’s connect with Mike Lee to map out your next steps.
FAQs
What is the difference between escrow and earnest money in Fort Wayne?
- Earnest money is your good-faith deposit. Escrow is the neutral account or process that holds and disburses that deposit and other funds per the contract.
How much earnest money is typical in Allen County?
- Many offers use deposits in the low-thousands, often 500 to 5,000 dollars, with higher price points or multiple offers leading to larger deposits.
Who usually holds earnest money in Fort Wayne?
- A title or escrow company often holds the deposit, though a broker’s trust account can also hold it. Your purchase agreement specifies the holder.
When is earnest money refundable in Indiana purchases?
- It is typically refundable if you cancel within a valid contingency period and follow the contract’s notice requirements for inspection, financing, appraisal, or title issues.
What happens if I miss a contract deadline?
- Missing a deadline can limit your right to cancel and risk your deposit. Ask for extensions in writing before a deadline expires.
How does earnest money apply at closing?
- Your deposit is credited toward your cash to close, including your down payment, closing costs, and prepaid items, as shown on the final settlement statement.
How can I avoid wire fraud when sending my deposit?
- Confirm wiring instructions by calling the title company at a verified phone number and be wary of last-minute changes or urgent emails.
What if the buyer and seller cannot agree on the deposit release?
- The escrow holder will typically require a mutual release, contract-based authority, or a decision from mediation, arbitration, or court before releasing funds.
