Earnest Money Deposits: Three Things Sellers Should Know
When buyers put an earnest money deposit down on a home, they're making a good faith offer to purchase. But sometimes it can feel like they're able to get the deposit back for any reason.
Here are three things sellers should know to keep the deposit fair and square:
1. If you're the seller's agent, cash the check if possible.
To help prevent buyers from pulling out of a contract, discuss cashing the earnest money check upon receipt with your seller. The cash will be escrowed until the deal closes. A cashed check will also prevent the buyer from clearing funds out of the account from which the earnest money came.
2. Understand the contingencies.
Contract contingencies provide numerous ways for a buyer to back out of a sale. Sellers need to review and close any "back door" addendums. If the contingencies are fulfilled and the buyer doesn't close, the seller can keep the earnest money.
3. Watch the contingency time frames
Contingencies obviously must be met within certain time frames. Suggest that your sellers add a "time of essence" clause to the sales contract. It makes the closing date binding. If the buyer can't close, the seller can keep the deposit.
If you’re thinking about buying a home or making a move, partner with a trusted real estate professional like Mountain Rose Realty to get started today!