What To Do To Ensure That You Receive Your Earnest Money Back

computer with money and a phone nearbyEarnest money deposit is the money you put down on a house that can essentially put a hold on the property. It can often be misunderstood but it is important that you understand what the intentions are and how you can make sure that it comes back to you should something go wrong. There are instances where the deposit can be forfeited and it is key that you know what to do and what not to do in order to make sure you get your property and your money that will go towards your down payment or closing costs.
 
It is typical, depending on location, to put down anywhere from 1%-10% down. Although if you are in a particularly competitive market then it might grow even higher. So it is important to be 100% positive that the property you are putting your money into is the one you truly want. 
 
Although earnest money stays in an escrow until the deal is done and added to the sale there are certain conditions where things could go the other way. One type is where you waive contingencies within the contract which could make it so you could possibly lose your earnest money. There are two types of contingencies that are usually waved. The financing and the inspection are the most common and can lead to forfeiture of your deposit if you are not careful. The financing contingency is where if there is an issue with the mortgage going through and it leads to you not being able to purchase the house. It is important to make sure that you have a conditional approval of a loan if you plan to waive the financing contingency. The inspection contingency can let you renegotiate the price or require that repairs are done if serious issues are found during the inspection, or even allow you to back out of the deal and recieve your money back. It is usually smart to not waive the inspection contingency unless you plan to tear down the property because you can run into a whole slew of issues after the inspection is completed and if you abandon the deal you will not get your money back at all.  
 
When putting a contract in for a home there is usually the guarantee of a certain timeline that makes sure that the amount of time it takes for all the parts of the process to proceed in a timely manner. There might even be a clause in the contract. As long as you make an effort to make sure that the items like inspection and appraisal are being done then you shouldn’t have to worry about losing your money. However, if you drag your feet too much then you can be in breach and you will forfeit the money you have put down.
 
The third reason you may lose your money is if you decide that you just want out of the deal and there is no problem with financing or the property. If this is the case then the earnest money is used to compensate the seller for the time and inconvenience they will have to go through in order to list the property again. That is why it is imperative that you are sure that the property is the absolute “one” for you. 
 
Finding a home can be a challenge but there are processes in place to help you when you find your dream home. Make sure that you are informed when you are choosing that home so that you don’t lose any money if things don't go your way. Having a knowledgeable real estate agent can help you make sure that everything goes well. Visit our agents page to find a qualified agent to help you.