When you’re buying a North County San Diego home, chances are you’ll pay an earnest money deposit when you sign the purchase contract. This deposit is typically up to two percent of the purchase price, though it could be more. The earnest money is a way to show the seller that you’re serious about your offer. The money is held in escrow until you close, at which time it’s applied to your down payment and closing costs. But you should be aware that if your purchase falls through, you could lose your earnest money deposit. Here are the 4 most common reasons why.
You’ve waived contingencies
We’ll be honest — it’s competitive out there for buyers today. With low housing inventory and high buyer demand, sellers can find themselves in enviable positions when it comes to negotiating. Some buyers may elect to waive their contingencies when they sign their purchase contracts to make their offers more attractive. This could include the financing contingency, the appraisal contingency, or the home inspection contingency. So let’s say that you end up not qualifying for a mortgage. If you’ve waived your financing contingency, which lets you back out of the contract if you don’t get your mortgage, then the seller can legally keep your earnest money deposit.
You missed important deadlines
Your purchase contract will contain timelines that need to be met in order for the sale to close. These will often include deadlines for securing financing, getting an appraisal, and scheduling a home inspection. The seller may negotiate an extension if you’re making an effort to meet the deadlines. For example if you’re having trouble getting things scheduled on time, like the home inspection. But if your contract contains binding deadlines and you don’t meet them, then you could lose the house and your deposit.
You changed your mind
If you’re a buyer in today’s market, you’re going to face some serious competition. When you’re shopping for a home, you need to be ready to make an offer as soon as you find the home you love. That’s why it’s so important for you to take time to determine your needs and your wants so that you know you’ve found the home you’ve been looking for. If you sign a purchase contract and later change your mind simply because you didn’t really know what you were looking for, then the seller has the right to keep your deposit.
You’ve had a change in personal circumstances
You never really know what life may throw at you. You could be in the middle of your home purchase and have a change in your personal circumstances, such as an illness, divorce, or job loss. These changes may require that you abandon the purchase of the home. While these circumstances are often unexpected and unfortunate, in many cases the seller can keep your earnest money if you back out of the sale. If you’re experiencing financial hardship, then you may be able to appeal to the seller — but the ball will be in their court.
Contact the Clark & Gilman Team today!
It’s important to have an expert on your side when you’re shopping for a North County home! Contact the Clark & Gilman Team at 760-758-1211 or [email protected] today to get started on your home buying adventure. We’d love to help you make your real estate dreams come true!