Developers in the United States typically collect payment through escrow accounts and earnest money deposits. Escrow services, managed by third-party neutral parties like banks or title companies, hold funds until all closing conditions are met, including inspections, title clearances, and regulatory approvals. Buyers often wire or transfer payment into escrow accounts, which are released only after the transaction closes. Earnest money deposits, usually 1-3% of the purchase price, are placed in escrow upfront to demonstrate the buyer’s commitment. These deposits are refundable if the deal falls through for specific reasons, such as financing issues or inspection failures.

The prevalence of escrow and earnest money deposits stems from legal and financial safeguards. Escrow ensures transparency and reduces fraud risk, as the neutral party verifies all requirements before disbursement. According to the American Escrow Association, 80% of U.S. real estate transactions use escrow, reflecting its industry standard status. Earnest money deposits protect developers from canceled deals without justification, while also deterring buyers from withdrawing without cause. The National Association of Realtors reports that 85% of U.S. home buyers submit earnest money deposits, averaging $5,000 to $20,000 depending on the property price. Additionally, escrow accounts help standardize closing processes, aligning with state laws like California’s Civil Code §1700, which mandates escrow for most residential transactions. Data from the Federal Reserve (2022) shows that 65% of home buyers prefer escrow due to perceived security, underscoring its role in mitigating transactional risks. These practices balance developer and buyer interests, ensuring smoother sales while complying with regulatory frameworks.