![]() ![]() “It’s there in case the buyer terminates the contract for any reason outside of their contingencies.” “It’s really good faith money,” says Kelly Allen, a top agent and seller representative specialist in Marietta, Georgia. ![]() If a seller terminates the contract outside of these contingencies, they typically must forfeit the buyer’s earnest money and - depending on the circumstances - may even be required to pay additional money damages and face other possible repercussions for breach of contract. However, if the buyer terminates the contract for any other reason not specified in these conditions, the seller is typically entitled to keep the earnest money as a concession for the time they took the home off the market to enter into the exclusive agreement. The deposit comes with certain conditions and time periods that define when the buyer can terminate the contract and reclaim the earnest money. Earnest money is often referred to as a “good faith” deposit. In this guide, we’ll outline the scenarios where you’re vulnerable as a seller, where you’re in the right to claim the earnest money due to the buyer failing to uphold their end of the contract, and what things you can do to protect yourself against the risk of a buyer pulling out at the last moment.Įarnest money is a deposit from a buyer paid at or immediately after having an offer accepted for a home to indicate that they are serious about following through with the transaction. This isn’t true in all cases there are specific ways that a seller can structure the contract to make it more difficult for a buyer to retrieve their earnest money at the final hour. ![]() Real estate contracts are generally stacked in the buyer’s favor so that all the way up until the final signatures, they may still have an escape route. In many cases, if a homebuyer wants to back out of a contract and retrieve their earnest money, they’ll be able to find a way to do so within the confines of the real estate purchase contract. If you need assistance navigating the legalities of keeping earnest money from a real estate transaction, HomeLight always encourages you to reach out to your own advisor. DISCLAIMER: This blog post is meant to be used for informational purposes only, not legal advice. ![]()
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