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Do I get my earnest money back?
Help me understand earnest money. What is it? Why do I need to pay it? Does it go towards my home purchase? What if I back out, do I get that money back? Clearly I need some help in understanding how this works. Thanks.
Asked By Peter G | Phoenix, AZ | 469 views | Finance Legal Info | 1 year ago
Answer(6)
Lisa and Greg Harris
eXp Realty, LLC
This is a great question. A local REALTOR that walks you through the home buying and selling process can answer the specifics of how that contract works concerning earnest money for your area as this differs by the contract and the area. But to answer in general, EArnest money tells a seller you are serious, willing, and able to buy a home. It does go towards the purchase as long as you move toward a successful closing to purchase. It is like a deposit to show your commitment as a buyer to purchase that home. There are details within a contract that you can get earnest money back if you go through due diligence and are unable to come to an agreement on repairs for an example. But to go into more specifics of getting earnest money back look to your contract and your local REALTOR to explain the details of the local contract. Hire a LOCAL REALTOR to give you the best guidance to know how this work for your locally! There are over 70 people that touch a transaction and it is 70 + opportunities to have something go wrong. So this is what your REALTOR can help you navigate! They do this everyday!
- 1 year ago
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Glenda X Bozett
RELI
This ( deposit / earnest money ) holds the home for you during escrow. This goes towards your purchase.
- 1 year ago
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Gloria Mitchell
Wilkinson Triad Realty
That depends on the terms of the agreement you made with the seller and the conditions of the contract. If the contract specifies that the earnest money will be refunded in certain circumstances, such as if the home inspection reveals significant issues, then you should be able to get it back. If the contract does not specify this, or if the home inspection does not reveal any issues, then you may not be able to get the earnest money back. You should consult an attorney to understand your rights.
- 1 year ago
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Mike Smallegan
Keller Williams Grand Rapids
Earnest money is a deposit made by a potential homebuyer to show that they are serious about purchasing a property. The deposit is typically held in escrow by a neutral third party, such as a title company or an attorney, until the sale is complete.
The amount of earnest money can vary, but it is typically a percentage of the purchase price. It is not uncommon for the earnest money deposit to be 1-3% of the purchase price.
The earnest money deposit is usually applied towards the down payment and closing costs on the home.
In most cases, if a buyer backs out of a purchase contract for a valid reason, such as the home failing a home inspection, the earnest money deposit is returned to the buyer. However, if the buyer backs out of the contract for no valid reason, the seller may have the right to keep the earnest money deposit. It is important to read and understand the terms of the purchase contract before making an earnest money deposit, and to consult with a real estate attorney or agent if you have any questions.
- 1 year ago
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Fatumo Sidow
Executive Real Estate
Hello Peter G. Earnest money is a deposit made to a Real Estate Seller at the time of the offer. The purpose of the deposit is to show the Buyer is serious about purchasing the Sellers property and will not be a waste of time. The money does result going towards the Buyers down payment. Earnest money is refundable. You can write in the offer contract that you would like to be refunded the earnest money before certain deadline. for example a Home Inspection Contingency. You can state when the home goes through an inspections, and you are not satisfied with the issues found with the house, you have the right to back out of the contract and get your earnest money back. Or another example; if your choice to purchase the property depends on whether you can receive a mortgage commitment. you can add in your contract a Mortgage Contingency.
If you wait until the closing day to back out of the contract. The seller will be keeping your earnest money due to liquidated damages.
- 1 year ago
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Curt Stinson
Engel & Volkers
This holds the home for you during escrow. This goes towards your purchase. Please reach out to me for more questions
- 1 year ago
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