If you’re selling a home, a farm or land in North Florida, the person who buys your property from you will most likely come up with an earnest money deposit. This earnest money deposit shows you that those buyers are serious; they’re willing to put some of their own money down to convince you to take your space off the market so they can buy it. Usually, the earnest money deposit is applied to the down payment or closing costs when the transaction closes. However, if the transaction is canceled, then one of two things happens: the buyer keeps the money or the seller keeps it. There are some cases in which the seller keeps the earnest money deposit. This guide explains.
When Can Sellers Keep Earnest Money?
Usually, if a buyer doesn’t uphold their end of the bargain, provided that there isn’t a contingency built into the contract that gives the buyer an easy out, the seller gets to keep the earnest money deposit. However, it’s important to note that many real estate agents build protections for their clients into the offer. Those protections include things like financing contingencies, appraisal contingencies, inspection contingencies and title search contingencies.
- Financing: If the buyer can’t secure financing to purchase the property, they get their earnest money back – but only if they can show that they tried and failed to get financing. Otherwise, the seller keeps it.
- Appraisal: If a property appraises for lower then what you are trying to sell it for, the buyer can usually try to renegotiate the purchase price or cancel the deal. Usually, that means the buyer gets to keep their earnest money.
- Inspection: Buyers nearly always hire home inspectors before they close on home. If the inspector finds major issues with the property, buyers typically try to negotiate the sales price, ask for credits, or come up with other solutions to push the deal through. However, they have the option of canceling the deal when an inspection turns up something that they can’t live with period in that case, the buyer will keep their earnest money.
- Title search: Buyers are usually allowed to void a contract if the title search shows a lien or other issues that could affect their ownership of the property. In a case like that, buyers are entitled to their earnest money deposit back.
What About Cold Feet?
If a buyer simply gets cold feet and wants to cancel the deal, that’s a no-go – at least from the standpoint of the earnest money deposit. In a case like this, when the buyer doesn’t have a valid reason for walking away and there is no contingency built in the contract to protect the buyers earnest money deposit, the seller usually gets to keep the cash.
Are You Buying a Home or Land for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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