BackIf you are ready to buy a home, having funds for an earnest deposit will be something to plan for before you make an offer. Your earnest deposit is there to show that you are serious about buying. For the most part, an earnest deposit is established to protect a seller. Once an offer is made, a listing is considered inactive. If a buyer doesn’t see an offer through, a seller is potentially losing money from not having an active listing. This is one of the main reasons a seller often gets to keep an earnest deposit.
When Can You Get Your Earnest Money Back?
But does this mean if you put an earnest deposit down you could lose your money no matter what happens to cause an offer to go awry? Actually, the answer is no. There are specific situationswhich allow a buyer to withdraw from an offer and retain their earnest money. Understanding what these are will help you be prepared should the unexpected occur and the home you wanted to buy turns out to not be the one.If you find a home you want to buy and put down an earnest deposit before securing your financing for the home, you could get your deposit back if you don’t get the loan you need. If you include a financing contingency within your offer, should you be denied a loan, you may be entitled to get your earnest deposit back. This won’t work if you simply get a higher interest rate than you wanted. You do have to be denied a loan to apply the contingency. Another contingency that can be included with an earnest deposit is in regards to selling your original property. If you own a home and are selling it as part of your process to move into a new one, or if you are unable to sell your home within a reasonable, specified time frame, you may be able to walk away from your offer and get your deposit back. To get either of these contingencies included in an offer, work with a Realtor® to establish the parameters of these possibilities. If a home you place an offer on comes back with a significantly lower appraisal value, you may be able to get your earnest deposit back should you decide not to buy the property. With an appraisal contingency, you can establish that you will purchase the home for the appraised value. If it comes in lower than anticipated, you can work with the seller to lower the price. If new terms cannot be agreed upon, you can back out of the offer and get your deposit back. If you are in the process of buying a home and the seller backs out for any reason, provided you do not have a non-refundable contract clause with your earnest deposit, you as the buyer will get your money back. Be sure you understand all the contingencies put forward by the seller before you sign an offer agreement. In the process of buying your new home you will want a full inspection done. If there is a major flaw found with the home, you may be entitled to get your earnest money back and to walk away from the sale. If certain types of problems become exposed from the inspection, you can renegotiate the price or cancel your offer. The main types of issues where this is possible include problems with the foundation, electrical or plumbing systems, a history of flooding or mold. The same applies to problems that are not disclosed by the seller. If it is clear that a seller has tried to cover up an issue by not disclosing it, you have the right to your deposit back in full. Having an experienced Realtor® is the best way to establish an offer that will not only protect the seller with an earnest deposit, but that will also protect you the buyer should you experience the unexpected. If you are ready to buy a home, or sell one, Linda and I, and Landry Team Solutions are here to help you with caring and exceptional service. We understand that a home is an investment, not just a transaction. To learn more about how we can help you, contact us by phone at (719) 598-4700, or by email at firstname.lastname@example.org.