If this is your first time buying a home, the idea of giving the seller a check without guarantee of getting the home might seem odd. However, it can increase the chances that you win the bid on a home. Before giving the seller your earnest money check, here is what you need to know.
What Is the Earnest Money Check?
The earnest money check is basically a deposit on a home that you want. Some sellers require that you pay a percentage to show that you are serious about buying the home. If you win the bid on the home, the seller keeps the check and the funds are applied to the purchase price of the home.
Whether or not you get your check back if you do not purchase the home depends on several factors, including how far into the buying process you were.
When Could You Lose the Check?
In most instances, the money is returned to the seller. The money is placed in an escrow account and usually remains there until the sale of the home is finalized. However, in some situations, you can lose the money.
For instance, if you chose to waive contingencies when it came to the inspection and financing. Normally, when you make an offer, the seller agrees to give you the money back in case your financing does not go through or there is an issue with the inspection that causes you not to want the home.
Some potential buyers choose to waive those contingencies in hopes of making their offers appear to be attractive to the sellers. Unfortunately, this does not always work out. In the event that something happens and you cannot buy the home, you lose out on your earnest money.
Another reason that you could lose the check is if you fail to buy the home within the time outlined in the contract you initially signed. Regardless of what led to the delay, the seller can choose to keep the check.
There is a possibility that the seller could decide to give you back the check if he or she feels that you made a good faith effort to purchase the home within the agreed upon time. If so, you can still apply the funds to the purchase if you want to still buy the home.
A residential real estate attorney can provide further instances in which you might not get the earnest money check back and help you explore your legal options for potentially fighting its loss. Contact an attorney, such as Steve Butcher Sr, for more information.Share