Home Buying & Selling Can You Get Your Earnest Money Back? Yes! Here’s How

Can You Get Your Earnest Money Back? Yes! Here’s How

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Making an offer at home can make it feel like it’s happening so fast, so you have little time to think about it. A little to make sure you (and others you are buying with) understand all the important parts of the offer contract, especially why you are allowed to cancel the offer. Please take the time. These are called “accidental events” and are set up to protect your serious money.

This is a summary excerpt from Chapter 10. First Home Buyers: A Complete Playbook to Avoid Newcomers’ Mistakes By Scott Trench and Mindy Jensen. To get more tips for first-time homebuyers Find a book At the Bigger Pockets Bookstore!

What is the contingency?

This is a fancy word for “condition”. Pay for the house in case of contingencies where everything goes well for the inspection. We will pay $ 100,000 for contingencies where the property values ​​at least $ 100,000. If your property has a valuation of only $ 99,999, you don’t need to continue to buy.

Do you remember your mom telling you that no one will win the ultimatum? Well, this is the only situation where your mom is wrong. All contingencies are ultimatums, and these ultimatums protect you (and your serious money) in the event of any problems during the purchasing process. If something goes south, the contingency of your contract allows you to cancel your purchase without losing your serious money.

Related: Authentic Money: What It Is, Why It Is Important-And How to Protect Your Deposit

What is real money?

Sign the offer agreement and submit a full-fledged money check. This shows a seller who is serious about your offer and is willing to put your money where your mouth is. The full-scale amount is determined by listing, but this number is the minimum required amount. If you are against competition, you can always make your offer stronger by increasing the amount of serious money.

Fortunately, your full-fledged money payments won’t go away. It will be credited to the down payment at the time of settlement. For example, if you write a $ 10,000 check for full-fledged money, it will be rolled over to cover some of your down payment and closing costs. If the down payment and closing costs happen to be less than that amount, they will be refunded after the house is yours.

Unfortunately, non-compliance with the terms and conditions or overdue may result in the seller’s serious money being confiscated. Your agent should help keep your dates and deadlines on schedule, but you want to make sure you are on top of them. Enter everything in your calendar and set alerts for the previous day so you always know everything you need. Your agent should help remind you, but you are the most hurt if you miss the deadline.

When can I get a full refund?

This depends entirely on the “contingents” section of the contract. Generally, as long as all deadlines are met, the buyer can cancel transactions in five common contingencies: loan approval, home sales, home inspection, appraisal, and title insurance.

Loan approval and home sales

If you currently live in a home that you have to sell before you buy another home, it will be an accidental home sale. Also, there is no big surprise that your lender must be able to accept and approve your loan before you can buy a house. If any of these fail, there is usually an escape hatch built into the contract that you can use to maintain full-fledged money.

Housing inspection

If you hire a property inspector and they find that the house is collapsing, you should be able to withdraw and keep your serious money. The extent to which this can be done depends on the contract and whether or not it includes unforeseen inspections.

You can make it clear to the seller that in case of contingency, you won’t mess with everything to negotiate further about the price. Basically, we do not ask you to repair the “little things” in the inspection report.

If you have only been inspected to check key items such as HVAC system, roof, structural integrity, radon level, note this in the offer and specify what needs to pass the inspection. please give me. This contingency is especially useful when buying an old and ugly house to force gratitude. When planning to tear it all up anyway, you probably don’t care if the ancient shag carpet is dirty.

Appraisal

A third-party expert will evaluate and ensure that the value of the home and the purchase price are not miles apart. The appraiser examines the equivalent properties sold recently (the same properties that you instructed to check with the agent to determine the purchase price) and uses those comps to determine the value of the home. increase.

Your contract may include a rating section that outlines the rating process, its payers, and what happens if the rating falls below value.

For example, if a buyer offers $ 410,000 to a home valued at $ 400,000, there are three options. The seller can agree to lower the price, the buyer can bring the excess $ 10,000 to the table so that the loan amount does not exceed the value of the house, or the buyer can cancel the purchase altogether. I can. If this is specified in the contract, they should be able to withdraw and still keep their serious money.

Related: What is underwriting?This is what to expect

Title insurance

As simply as possible, the title specifies who has the right to the property. When you buy a home, you are given ownership of the property and there is a transfer titled that the seller gives up ownership in exchange for selling the home. The title company handles this process and title insurance protects both you and your lender from title flaws.

If your new home is on a parcel of land that was once owned by Farmer Joe, you would assume that he legally sold the property to the person who built the home there. But things can be a nuisance to you if he pulls something fast to the buyer and his great-grandchild has legal rights to half of the land under your home.

Similarly, if the previous owner of the house didn’t pay to replace the $ 30,000 roof, the roofer would eventually get the hard-earned money in the house. There may be a lien. If you overlook this when you buy a house, that $ 30,000 will be your problem.

Your contract includes a deadline for several different titles, during which the seller provides a copy of their current title, and you and your agent can scope it for suspicious things. There is also a title challenge and title resolution deadline that allows you to point out and resolve issues before that, or cancel the offer altogether without losing full-fledged money.

Solving title issues is very complex or very easy. Properties with ownership issues may not be covered by ownership insurance or may be excluded from the insurance policy. In other words, you may lose interest in the property. The title is complicated, so please be able to cancel the contract if the title is urgent.

If your home sale fails, all hope is not lost. Follow these tips to get a full-fledged money refund and buy First Home Buyers: A Complete Playbook to Avoid Newcomers’ Mistakes For smarter home buying tips.

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