When you’re buying a home, you need an earnest money deposit as a show of good faith to the seller. The deposit goes toward your closing costs when the deal is closed, but what happens to it if the deal falls apart? I’m answering that question in detail today.
First and foremost, you need to follow the guidelines of your contract. If it says you need to have a home inspection done by a certain date or a specific type of financing, you better make sure those conditions are met. As long as you follow the rules in your contract, there will be provisions about when and where earnest money is refundable.
“Everything goes back to the contract."
Let’s say you do a home inspection and some big issue comes up. If your contract says that your earnest money is refundable so long as you get the home inspection done by a certain date, then you get the money back.
If you’re getting a loan to buy the home, but it’s declined right before closing, you should also be able to get your earnest money back based on a standard contract. If the seller backs out of the deal, that’s another situation where your earnest money is refundable.
Everything goes back to the contract. Make sure you and your agent are clear about what it entails and where your outs are. Backing out of a deal without cause or delaying your home inspection could lead to you losing out on a home and losing your earnest money deposit.
I’d be happy to send you a blank copy of a Tennessee or Georgia contract if you’d like to see one. If you have any other questions about earnest money, what to look for in real estate contracts, or real estate in general, don't hesitate to reach out via phone or email. I look forward to hearing from you soon.
