When you find your dream home, your Realtor® will tell you it’s time to make an offer—and with that offer comes your earnest money deposit. In most cases, you’ll be able to get your earnest money deposit back if you need to cancel the deal… but there are steps you can take to ensure you protect that cash, just in case.
What is Earnest Money?
Your earnest money deposit is money you let your Realtor hold in escrow for you to show a seller you’re serious about purchasing his or her home. (An earnest money deposit is sometimes called a good faith deposit.)
There’s no set requirement for how much money needs to be part of your good faith deposit. Remember, though, that you need to show the seller you’re serious about buying—and that includes showing that you’re willing to put your money where your mouth is.
Could You Lose Your Earnest Money Deposit?
Your purchase contract will have all the details about when you can keep—and when you’ll lose—your earnest money deposit. If you jump ship on a transaction for no reason, you may end up losing the money you put in escrow; likewise, if you waive the contingencies, such as a home inspection, an appraisal, or others that may tank your deal, you stand to lose your cash.
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