How Much Earnest Money Do You Need in Sioux Falls?

How much earnest money do you need to buy a house in Sioux Falls?

In Sioux Falls, earnest money usually runs about 1% of the purchase price — roughly $3,000 to $3,500 on a $335,000 home, the June 2026 median. Most offers land somewhere between $1,000 and $5,000, with stronger, more competitive offers on the higher end. The money is held in escrow by the title company, and you get it back if you cancel while an inspection, financing, or appraisal contingency is still active.

By Tyce Ortman — August 8, 2026

Earnest money is one of the first real checks you write in a home purchase, and it’s the one that makes buyers nervous. You’re handing over a few thousand dollars before you own anything. It’s a fair question to ask where that money goes and whether you can get it back — and it’s one of the most common things buyers around Sioux Falls want to understand before they make an offer.

Here’s exactly how it works in our market.

What earnest money actually is

Earnest money is a good-faith deposit that shows a seller you’re serious. When your offer is accepted, you put this money down to back up your promise to follow through. It signals that you’re not going to tie up their home and walk away on a whim.

Two things buyers are relieved to hear:

It’s not an extra cost. Your earnest money is credited toward your down payment and closing costs at closing. It lowers your cash due on closing day rather than adding to it.
It doesn’t go to the seller. A neutral third party holds it until closing.

Earnest money is a separate piece from the rest of your upfront cash. If you want the full picture of what you’ll need to bring to the table, I break that down in how much cash you need to buy in Sioux Falls.

How much to put down in the Sioux Falls market

There’s no fixed rule in South Dakota, but here’s what’s typical right now:

Standard range: $1,000 to $5,000 on most homes in the $200,000 to $600,000 range.
The 1% rule of thumb: about 1% of the purchase price is a solid, competitive number. On a $335,000 home, that’s roughly $3,350.
Competitive segments: in price points where inventory is still tight, a larger deposit can make your offer stand out.

Market context matters here. Inventory in Sioux Falls is down about 30% from a year ago, with only around a 3.3-month supply of homes, and sellers are still getting close to 99% of their list price. In the tighter, well-priced segments, a stronger earnest money deposit is one way to signal you’re a committed buyer without overpaying on price.

At the same time, builders are adding new-construction inventory, which gives buyers more room to negotiate than they had at the peak of the seller’s market. If you’re weighing a brand-new home against an existing one, I compare the trade-offs in new construction versus resale in Sioux Falls. Just know that builder contracts handle earnest money differently — more on that below.

Who holds your earnest money

In Sioux Falls, your earnest money is almost always held by the title company — often First Dakota Title or Title Guaranty — in an escrow account. South Dakota does not require an attorney to close a home sale, so the title company is the neutral party that manages the funds and handles the closing itself.

This matters because your money sits with someone who has no stake in the outcome. It isn’t in the seller’s bank account, and it isn’t with your agent. When you close, the title company applies it toward your costs. If the deal falls apart under the terms of your contract, the title company releases it back to you.

When you get it back — and when you don’t

This is the part that keeps buyers up at night, so let’s be clear about it.

Your earnest money is protected by the contingencies written into your purchase agreement. As long as you cancel while one of these windows is still open, you get your deposit back:

Inspection contingency: if the inspection turns up problems you’re not comfortable with, you can walk away and keep your deposit. This is a big reason I’m cautious about giving up that protection — I walk through the risks in whether you should waive the inspection to win an offer.
Financing contingency: if your loan falls through despite a good-faith effort, your earnest money is returned.
Appraisal contingency: if the home appraises below your contract price, you can renegotiate or cancel and get your money back.

Your earnest money is at risk when:

You cancel after your contingency deadlines have already passed.
You simply get cold feet and back out for a reason the contract doesn’t cover.
You default on the agreement.

The pattern is simple: contingencies are your safety net, and deadlines are what close that net. The cleanest way to protect your deposit is to know your dates and stay in close contact with your agent and lender so nothing lapses by accident. Getting fully pre-approved before you house hunt is a big part of keeping your financing timeline on track.

New construction is a different animal

If you’re buying a new build from a local builder, expect the earnest money conversation to change. Builders usually ask for more — often 1% to 5% of the price — and that deposit is frequently non-refundable once you’re past a short initial window. You’re reserving a lot and a construction slot, and the builder wants certainty.

That’s not a reason to avoid new construction. It’s a reason to read the builder’s contract closely and understand exactly which milestones make your deposit non-refundable before you sign.

The bottom line

For most Sioux Falls buyers, plan on roughly 1% of the purchase price in earnest money — commonly $1,000 to $5,000 — held safely in escrow by the title company and credited back to you at closing. Handled right, with your contingencies and deadlines respected, it’s money you either put toward your own purchase or get back. It’s rarely money you lose.

Your exact number depends on the home, the price point, and how competitive the situation is — and that’s the kind of thing worth talking through before you write an offer. If you’re getting ready to buy in Sioux Falls, Brandon, Harrisburg, or Tea, grab my free Sioux Falls Buyers Guide to walk into the process prepared. And if you’d like to think through your own offer strategy, I’m always happy to help — reach out anytime.

Frequently Asked Questions

Is earnest money refundable in South Dakota?

Usually, yes — as long as you cancel while a contingency is still active. If you back out during your inspection, financing, or appraisal window, your earnest money is returned. It becomes at risk only if you cancel after those deadlines pass or default on the contract for a reason the agreement doesn’t protect.

Who holds earnest money in Sioux Falls?

A neutral third party — almost always the title company, such as First Dakota Title or Title Guaranty — holds your earnest money in an escrow account. It does not go to the seller or sit in your agent’s pocket. South Dakota does not require an attorney to close, so the title company manages the funds and the closing.

How much earnest money should I put down on a new construction home near Sioux Falls?

Builders typically ask for more than resale sellers — often 1% to 5% of the purchase price, and sometimes a set deposit per phase of construction. Builder earnest money is also frequently non-refundable once you’re past a short initial window, so read the builder contract carefully before you sign.

Does earnest money go toward my down payment?

Yes. Earnest money is not an extra fee. At closing it is credited toward your down payment and closing costs, so it lowers the amount of cash you bring to the table on closing day.

What happens to my earnest money if the appraisal comes in low?

If your offer includes an appraisal contingency and the home appraises below the contract price, you can renegotiate or cancel and get your earnest money back. If you waived the appraisal contingency to win the offer, you would need to cover the gap in cash or risk your deposit.

About Tyce Ortman
Tyce Ortman is a residential real estate agent with the Jeff Merrill Team at eXp Realty, serving Sioux Falls, South Dakota and surrounding communities including Brandon, Harrisburg, and Tea. He works with both buyers and sellers, guiding them from first search or listing all the way through closing.