Earnest Money Deposit – How Is It Possible For The Buyer To Keep The Earnest Money If The Sale Doesn’t Push Through?

Earnest money deposit goes by another term which is good faith deposit.A certain amount of money that a real estate buyer deposits in a trust account or escrow after he and the seller have signed a purchase agreement is called earnest money deposit.If you have decided to buy a real estate property in Punta Gorda, for instance, after checking the Punta Gorda homes that are for sale, you can make an offer on it.Should your offer be acceptable to the owner, a purchase contract will be drafted and your earnest money will be held by an impartial third person in escrow until such time that the contracts have been finalized and signed.

It’s not unusual that a buyer may offer a big earnest money to make the seller give in to his low purchase offer on the property; this will then work in the buyer’s favor.What  makes it attractive to the seller is, in case the buyer defaulted on the purchase contract for unacceptable reasons, the seller keeps the earnest money for himself.The buyer will forfeit his earnest money because the escrow company will deem it fair that the seller should keep it since he has taken off the property from the listing after accepting the buyer’s purchase offer.They deem this is fair due to the argument that by holding the property on pending status, especially if for a long time, the seller could have already sold it and made money off of the sale.

The earnest money will be part of the buyer’s downpayment on the property.So for example, the downpayment the buyer has to make is $40,000 but he has deposited $10,000 in the escrow account, he needs to pay only $30,000 more in  downpayment.It’s not a wise move to make a big earnest money that you might only lose due to unforeseeable events that may occur during the buying process.

The only way the seller cannot keep the earnest money is if the buyer has put contingencies in place.The buyer should consider his concerns with regards to buying a house.In case the buyer has specific criteria for home inspections and they are not met, this is considered a condition that should be included in the contingency.All conditions of the buyer included in the contingency should be put down in writing so that if they are not met, he can easily get out of the contract and keep the earnest money. See also the Punta Gorda Real Estate.

These are the concerns that the buyer should put into writing: should he be able to sell the house at a certain price first to complete the purchase?Is there a need for the house to be appraised at a certain value because the buyer cannot afford to pay the difference if it’s appraised at a lower price?If there are repairs to be made, should the seller make them first before the buyer could push through with the sale?

If these conditions are in writing, the seller might agree and sign the contract.