Whether you’re buying a waterfront home in Wesley Chapel, a luxury home in Apollo Beach, or a condo in St. Petersburg, earnest money is an incredibly important part of the process. This deposit, which can range between 2 and 5 percent of the purchase price, lets the seller know that you are serious about buying the property. If you’re not careful, however, you can lose that money and not get it back. Here are the three most common scenarios in which you can lose your earnest money.
Waiving Your Contingencies
Financing contingencies ensure that you’ll get your money back if, for some reason, your mortgage isn’t approved. Waiving your contingencies doesn’t come without risks, which could be huge if your earnest money is a large sum. The same goes if the inspection turns up something that causes you to break the deal.
Ignoring the Contract Timeline
Watch out for phrases such as “time is of the essence” in your contract. Most sellers will grant you a reasonable extension if you can’t secure financing, get the home inspected and be available for closing within a reasonable time. If this phrase is included, you had better make sure you do everything within the allotted time.
You Change Your Mind
The reason doesn’t matter. That’s why you put down earnest money in the first place. It’s protection for the buyer for taking the home off the market.
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