Buying a home in Nairobi’s upmarket neighborhoods—such as Karen, Runda, Kileleshwa, Gigiri, Riverside, and Lavington—comes with significant financial decisions. One of the most misunderstood elements for first-time and seasoned buyers alike is earnest money, a crucial part of making a compelling offer. While many assume it’s just another fee, earnest money plays a far more important role: it signals your seriousness to the seller, strengthens your offer, and secures your place in the transaction. Paired with due diligence, it provides structure, security, and fairness for both parties.
This guide breaks down everything Nairobi buyers must know about earnest money, how it fits into the purchasing process, and how due diligence protects you from major risks. Below are seven powerful insights to ensure you move forward confidently when purchasing your next upmarket property.
1. What Earnest Money Really Means in a Nairobi Upmarket Transaction
Earnest money is a good-faith deposit made by a buyer to demonstrate commitment to purchasing a property. In Nairobi, especially in premium estates, sellers expect buyers to provide this deposit soon after the offer is accepted. While the amount varies based on negotiations, it typically ranges from 2–10% of the purchase price.
The deposit is not an extra cost; rather, it becomes part of your total payment at closing. Its purpose is simple:
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It reassures the seller you’re serious.
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It protects the seller from buyers who might walk away without cause.
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It secures the home as “off the market” for you during due diligence.
In slower markets or when sellers need urgent sales, an offer with higher earnest money can make you stand out.
2. How Earnest Money Works Step-by-Step
Understanding the flow of earnest money helps you avoid surprises later:
Step 1: Offer Acceptance
Once your offer is accepted, the seller or their agent issues instructions for deposit.
Step 2: Deposit Transfer
You deposit the earnest money into a secure holding account—typically handled by:
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A legal firm
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A licensed escrow holder
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Your real estate agency’s trust account
Step 3: Funds Remain Protected
The money is not accessible to the seller until closing. It stays protected under escrow rules.
Step 4: Applied at Closing
At completion, your earnest money goes towards your:
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Down payment
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Stamp duty
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Other closing costs
If the Deal Falls Through?
Whether you receive a refund depends on contract terms and due diligence findings.
For a deeper understanding of escrow processes, you may review resources like the Consumer Financial Protection Bureau, which provides general guidance on buyer protection.
3. The Role of Due Diligence in Safeguarding Your Earnest Money
Due diligence is the investigation period where the buyer verifies every detail of the property before fully committing. In Nairobi’s upmarket neighborhoods, due diligence is essential due to high-value transactions and variable development histories.
Key due diligence activities include:
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Land title verification
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Property search at the Ministry of Lands
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Structural inspections
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Valuation assessments
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Checking building approvals and compliance
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Confirming utility connections
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Reviewing Homeowners Association rules and fees
If due diligence reveals undisclosed issues—such as structural defects, unpaid land rates, or title inconsistencies—you have grounds to withdraw and receive a refund of your earnest money.
For example, guidelines from organizations like the American Society of Home Inspectors (ASHI) can help you identify what inspectors typically look for.
This is why due diligence and earnest money work together to protect buyers from risky purchases.
4. When Earnest Money Is Refundable (and When It Isn’t)
You Get a Refund When:
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Due diligence uncovers major problems
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The seller breaches the contract
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Financing falls through due to no fault of your own (if included in your contract)
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The seller delays beyond agreed timelines
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Government restrictions affect the sale
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Title verification fails to meet legal standards
You Don’t Get a Refund When:
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You simply change your mind
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You fail to meet contract deadlines
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You ignore inspection requirements
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You walk away for reasons not covered by the offer
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You’re unable to secure funds due to personal issues (unless protected in the contract)
Refundability ultimately depends on how your agreement is drafted. This is why working with a legal professional is not optional—it’s essential when large deposits are involved.
5. How Much Earnest Money Should Nairobi Upmarket Buyers Really Pay?
There is no fixed rule for earnest money in Kenya, but standard practice in Nairobi’s prime neighborhoods typically looks like this:
For Homes Under KSh 30 Million
2–5% earnest money is common.
For Homes Between KSh 30 Million and KSh 80 Million
5–8% is more competitive and appealing to sellers.
For Ultra-Luxury Properties Over KSh 100 Million
8–10% may be required to show financial capability.
Factors influencing the amount include:
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Level of buyer competition
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Seller urgency
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Property uniqueness
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Market demand fluctuations
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Presence of multiple offers
To understand broader market conditions that affect negotiations, professionals often refer to macroeconomic data from institutions like the Central Bank of Kenya.
6. Why Earnest Money Gives You Negotiation Power in a High-Value Market
In Nairobi upmarket transactions, sellers appreciate certainty—and earnest money sends a strong message of commitment.
Providing a meaningful earnest deposit can help you negotiate:
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Lower purchase prices
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Extra concessions
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Longer closing periods
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Seller-paid repairs
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Early access for planning or furnishing
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Priority over other buyers
Additionally, it signals that you are financially prepared, organized, and serious.
Strong earnest money = strong negotiating leverage.
7. Common Mistakes to Avoid With Earnest Money (Costly Errors Buyers Make)
(Image alt: earnest money mistakes Nairobi buyers)
Here are the most common pitfalls Nairobi buyers should avoid:
❌ Depositing earnest money directly with a seller
ALWAYS use escrow or a law firm.
❌ Skipping due diligence because the property “looks fine”
Even luxury homes can hide major issues.
❌ Failing to get refund terms in writing
Verbal promises do not protect your money.
❌ Missing contract deadlines
This can automatically forfeit your deposit.
❌ Offering too little earnest money in a competitive market
It weakens your offer.
❌ Not verifying the title thoroughly
Nairobi has had cases of double allocation and forged ownership documents.
Avoiding these mistakes ensures your earnest money remains safe and your buying journey remains smooth.
Final Thoughts
Understanding earnest money and how it interacts with due diligence gives Nairobi upmarket buyers a major advantage. These two components provide structure, transparency, and protection throughout the home-buying process. When handled correctly, earnest money strengthens your offer, speeds up negotiations, and ensures you remain in control of your investment.
Call to Action
Ready to buy a home in Nairobi’s upmarket neighborhoods?
Whether you’re evaluating properties, navigating due diligence, or deciding how much earnest money to offer, expert guidance can save you time, stress, and money.
Reach out today at Realty Boris to get personalized support and access to exclusive upmarket listings. Let’s secure your dream home with confidence.
