- Best Real State Attorney To Get Earnest Money Back For A
- Real Estate Attorney Earnest Money
- Best Real State Attorney To Get Earnest Money Back At Closing
- Best Real State Attorney To Get Earnest Money Back
How to Get Earnest Money Back: What Buyers Should Know
Some buyers are willing to forego an inspection contingency in order to get a house for a low price. That might or might not be the best option for you as a buyer, so be sure to know fully what you are getting into. Otherwise, your earnest money could be at risk if you back out because of an inspection item. An earnest money deposit can be anywhere between 1 – 5% of the purchase price of the home. So, if you are buying a home for $500,000, the earnest money will range from $5,000 to $25,000. Depending on location, home buyers can expect to put down anywhere from 1% to even 10% of the real estate purchase price as earnest money. (In some highly competitive markets, buyers are making.
Looking for and buying a home doesn’t always go smoothly. Problems can arise at any stage of the home buying process which can derail the plans you had to buy a home.
Whether something went wrong in the process or you changed your mind, you may be wondering how you can pull out from the deal you started. For one, you might be wondering how to get earnest money back after you have decided not to go through with the purchase of a house.
In this article, we’ll go over what happens to your earnest money, in what situations you can get your earnest money back, and how to go about asking for this large sum of money!
What is Earnest Money?
Earnest money or good faith money is a deposit a buyer makes into an escrow account to show they are serious about buying the property. Without earnest money, which is about 1-3% of the property purchase price, any buyer could say they are interested in buying a home but may not actually be committed to it.
Earnest money saves the seller’s time and shows the buyer they are committed to the purchase.
Is Earnest Money Refundable?
Alberta casinos money laundering. Yes! Earnest money is refundable, it just depends on the circumstances. If you tell the seller that you are backing out of the home buying process before certain deadlines, then there should be no issue refunding the earnest money to you. The same applies if you didn’t break any contract rules.
If you back out after certain deadlines or break the contract, then you may not be able to get your earnest money back.
Situations Where You Can Get Earnest Money Back
In the contract, there will be contingencies that allow you to get out of the agreement. Contingencies like these lead to certain cases where buyers can get their earnest money back. These contingencies have deadlines though, so if you decide to back out, then you must contact the seller before the deadline.
- Home Inspection Contingency – If the home goes through an in and there are issues, you can negotiate with the seller to have the problems repaired or back out of the purchase.
- Appraisal Contingency – If the home appraises at a lower value than the agreed purchase price of the home and the seller won’t lower their price, then the buyer can back out and get their earnest money back.
- Home Sale Contingency – If there is an issue with you, the buyer, not being able to sell your current home, you are allowed to back out and get your earnest money back. This contingency is put in place so you are not forced to pay two mortgages.
- Funding Contingency – If you are denied a loan from the bank to buy the house, you can still back out with no penalty.
How to Get Earnest Money Back
Now we’ll go over the process of how to get earnest money back, assuming you are doing it before the deadline.
1. Contact Seller in Writing
You’re starting to doubt that this home is right for you. Maybe the inspector found some problems that have put you off from committing to the purchase. Now you must contact the seller with your decision to back out. Make sure to do it before the inspection contingency deadline ends, if that is the stage when you are backing out.
It’s crucial you communicate with the seller in writing why you do not want to continue. Your real estate agent can help you with writing the letter.
2. Sign Release Forms
Dota 2 real money auction house. Assuming the seller does not contest to you getting your earnest money back, then you should both sign release forms. This says that you both agree that the earnest money will be returned to you. Make sure to contact your realtor or lawyer to find out about any other forms you need to sign.
3. Contact the Escrow Company
After signing the release forms, it’s important that the escrow or title company is also on the same page. Alert them of your decision to back out of the deal and send them the signed documents. They will then process them and if all is in order, you should receive your earnest money in a few days.
A No-Hassle Escrow Company
If you need help with the home buying process and want to make sure you work with an escrow provider that is fair with your earnest money, contact New Venture Escrow today! We’ll make sure the escrow process is as simple and smooth as can be the next time you decide to purchase a home! You can learn EVERYTHING about escrow CLICKING HERE!
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Recently a client of one of our agents wanted me, as our agency’s Designated Broker, to compose a “Letter of Assurance” guaranteeing their earnest money would be returned to them if they employed a certain tactic. (See Earnest Money ”“ What, why, how much? for an explanation of what earnest money is.)
The short answer is no, I can not make any assurances of what may happen to your earnest money.
“Say what?” the client is probably thinking. They hand over a check, sometimes for a significant amount of money, and I as one of the brokers in the transaction can’t guarantee what will happen to their funds? That doesn’t sound right”¦
Here’s the deal. Earnest money, and how it is distributed in the event of a contract dispute between the parties involved, is handled by the escrow company. This is all spelled out in Section 3f of the standard Arizona Residential Resale Real Estate Purchase Contract:
Release of Earnest Money: In the event of a dispute between Buyer and Seller regarding any Earnest Money deposited with Escrow Company, Buyer and Seller authorize Escrow Company to release Earnest Money pursuant to the terms and conditions of this Contract in its sole and absolute discretion. Buyer and Seller agree to hold harmless and indemnify Escrow Company against any claim, action or lawsuit of any kind, and from any loss, judgment, or expense, including costs and attorney fees, arising from or relating in any way to release of Earnest Money.
Or, in plain English non-legalese speak, the escrow company decides who gets the earnest money and if you don’t like their decision there isn’t much you can do about it.
So back to our original question; can I guarantee how the escrow company will distribute your earnest money in the event of a dispute? Absolutely not. It’s up to them to decide, and you agreed to that when you signed the contract. Will I go to bat for you in the event of a dispute? You bet I will. But ultimately the decision rests with the escrow company.
Best Real State Attorney To Get Earnest Money Back For A
Does this seem silly? On the surface, probably. Consider the alternative though”¦ An escrow company is a neutral third party in the transaction. As such, they are in the best position to make decisions that affect how earnest money is distributed between parties to the contract. The only other alternative would be to have brokers on both sides decide, and clearly that wouldn’t work as the buyer’s broker would side with the buyer and the seller’s broker would side with the seller. Every time. Nothing would get decided and it would wind up going in front of a judge or jury ”“ another neutral third party, and not an inexpensive option.
Real Estate Attorney Earnest Money
That’s why this decision is left in the hands of the escrow company. We can tell you based on experience what the escrow company is likely to decide, but we can’t make promises about things we have zero control over. Contrary to popular belief, escrow officers are people too, and as human beings they are not infallible. In the trickier cases, it’s not one person at the escrow company that makes the decision. A bevy of attorneys can be involved, and yes they are people too. Really. The decisions escrow companies make with regard to earnest money disbursement is almost always spot on.
Best Real State Attorney To Get Earnest Money Back At Closing
Just don’t ask me to guarantee that and write you a check if you disagree with their decision.
Best Real State Attorney To Get Earnest Money Back
IMPORTANT NOTE: All of the above pertains to real estate as it is commonly practiced in the state of Arizona. Real estate law and practices vary by state. Your state laws and practices may be entirely different than Arizona’s. In addition, real estate contracts can be modified and changed on an individual basis. The boilerplate language shown here is just that ”“ boilerplate that could have been modified in your contract. Always consult with your agent on specifics to your contract and transaction.