An earnest money deposit is a great way to show a seller you’re serious about the offer you’re making on their home. By placing a portion of what amounts to your down payment on the table to demonstrate your commitment to follow-through on the contract, you’re saying “I really want this home and I’m ready to move forward.” But there’s a real risk involved: If you make a mistake, you might just be out a chunk of cash.
Here are some ways to avoid losing your earnest money deposit:
1. Make sure it’s the home you really want. Seem obvious? Sure. But it’s easy to get swept up in the moment. Recognize that you’re about to enter into a legally binding contract and that the money you’re risking will hurt if you change your mind. While you may not be able to drag your feet on the decision, at least see if there are any reservations lurking in your mind before you commit.
2. Don’t sacrifice contract contingencies. Don’t let your desire for a home cause you to blindly remove contingencies which are built into contracts to protect buyers. Common ones include loan contingencies, title search issues, appraisal, and insurance obstacles. Waive these at your own peril.
3. Use caution when committing to a home “as is.” If you’re putting earnest money on an offer for a distressed property or one in need of repairs or upgrades, take the time to understand the home’s needs before you write the offer.
4. Read the contract timelines. Look at closing dates and other dates related to the process leading up to closing. Violating the timeline could cost you your earnest money as well.
5. Ensure you have recourse to get some or all of your earnest money back. If the sale falls through, the seller and the buyer will need to sign a document voiding the agreement. Don’t sign this until you understand how it will impact the earnest money refund.
Protect yourself and your down payment by playing smart with your earnest money. If you have questions or concerns, ask your agent to help you understand everything in plain language!
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Bowie MD Real Estate Listings, Upper Marlboro MD Real Estate Listings, Silver Spring MD Real Estate Listings, Washington DC Real Estate Listings and Real Estate Services. Denise Watkins is your local Real Estate Expert for Upper Marlboro and the surrounding areas! Looking for a Realtor who can help you sell or purchase a home, my online services are available to assist you now and you can also email, text, or call me: Denise Watkins 202-489-5478.