How does earnest money work at closing

It compensates them for the time, money and effort required to list the property again and obtain another buyer. Take the following measures to protect your earnest money from fraud or unjustifiable forfeiture:. Buying a home is a big purchase.

You want to make the best offer and protect yourself in the process. Earnest money allows you to communicate your seriousness and ensure your seller is committed. Please review its terms, privacy and security policies to see how they apply to you. Skip to main content Please update your browser. Please update your browser. Credit Cards. Checking Accounts. Savings Accounts.

Home Equity. Invest with a J. Morgan Advisor. Online Investing with J. Chase for Business. Commercial Banking. See all. About Chase J. Understanding earnest money. Importance of earnest money In most cases sellers will ask for a good faith deposit. That means the seller gets to keep the cash if the sale falls through for any reason.

Before you go for this tactic, talk to your real estate agent about your options and make sure you don't offer money you can't afford to lose. Our real estate Endorsed Local Providers ELP are experts in your local market and have proven track records of excellence. They will take you through the process step-by-step and make sure everything goes right. Find an agent in your area today! Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since Millions of people have used our financial advice through 22 books including 12 national bestsellers published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Guided Plans. So long as you satisfy the terms of your agreement and purchase the home as agreed, the earnest money remains yours until the close of sale. Unfortunately, home sales don't always go as planned. You may cancel your sales agreement if any of its contingencies aren't met.

Contingencies are conditions that you add to your sales contract that the home, you or the seller must meet before the sale gets finalized. You may, for instance, agree to purchase the new home only if your current house sells in 60 days. If it doesn't, you can cancel the sales contract without penalty. Perhaps your contract fell through because the home you were buying failed its inspection.

It's also possible that the seller changed his mind for whatever reason. If the sale of the home falls through and you're not to blame, the escrow agent will return your earnest money to you.

What Is Earnest Money? When Is Earnest Money Due? Back to top Earnest Money Factors to Consider There are a lot of market factors to review when making an offer, so getting a feel for how much earnest money you should put down is key. Market trends Depending on the region, homes may only be on the market for a few days before offers are even entertained.

Let your earnest money do the talking If you really want to purchase a given home, it may be wise to aim high. Back to top Is Earnest Money Refundable? Remember your contingencies Always keep in mind the contingencies you and the seller put in place. Stick to the timeline Delayed earnest money refunds are most commonly the result of missed deadlines. Back to top Gain Protection for What Matters Most Buying a home may take a lot of patience, dedication and research, but few milestones in life can feel as rewarding.

How would you rate this article? Ready for a Quote? ZIP Code is required. Invalid ZIP Code. ZIP Code. Related Articles.