How does the seller keep earnest money if buyers fail financing contingency?

Answer by  bricen (77)

A real estate buyer will generally hand over "earnest money" to his or her agent at the time an offer has been accepted. This earnest money is put into an account and is used towards the purchase price of the property at the time of closing. If the closing does not occur, the money is forfeited to the seller.

Answer by  John38 (79)

If the buyer removes the financing contingency and then cannot get financing and must back out, and is then found to be in breach of the agreement, under the contract the seller would be entititled to "liquidated damages" for the buyer's breach, equal to the deposit amount.

Answer by  rhonda515 (607)

This is dependent upon the state you live in and your contract.If a buyer is unable to secure financing , then in most states teh seller and buyer will sign a release. The buyer will receive his earnest money back.

Answer by  Devin98 (487)

A seller cannot keep the buyer's earnest money if there was a financing contingency within the purchase agreement since this is the point of the contingency. Had there not been a contingency for this wihtin the contract then you might have been able to keep the earnest money depending upon the laws within you particular state.

Answer by  Devin98 (487)

A seller can not keep the buyer's earnest money if they fail to get final financing approval. The only way a seller can keep this money is if there is a contingency in the signed offer that states the money would not be returned for any reason including failure to get approved financing.

Answer by  John (9008)

Earnest money is basically a non-refundable deposit. It helps protect the seller; after all, they have pulled the house off of the market while waiting on the financing, and could have lost out on selling it to someone else.