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What's Earnest Money? When Can A Seller Keep It?

Updated: Nov 16, 2022


What is earnest money? Does it matter? Can you lose earnest money? As your local realtor here in southeast Wisconsin, I love answering all your real estate questions so let's get started right now


What is earnest money? Does it matter?

Earnest money is a monetary deposit that you put down after you get an accepted offer to purchase. It shows the seller your intention to follow through with the offer. Earnest

money is not an addition to your offer price but is part of your offer price. When you get to closing on the property, the earnest money will be applied to either your down payment or your closing cost.


Can you lose earnest money?

Although earnest money is generally refundable, there are some rules and regulations that dictate who gets to keep the earnest money in the event your offer does not go to closing.


There are four main contingencies in the offer to purchase that can affect earnest money. These four contingencies are:

  1. Home inspection

  2. Sale of the existing home

  3. Appraisal

  4. Financing

If one of those contingencies can't be met through no fault of your own, your earnest money will be refundable. However, if you make a decision to cause the contingency not to be met, you could be found in breach of contract in which case the seller could keep your earnest money.


For example, buying a new car two weeks before closing is probably not a good idea.


If you have any questions about things you should or shouldn't do prior to closing, check with your mortgage advisor and your realtor because neither one want you to lose your earnest money.


If you found this post helpful, please like, share, or comment. I’ll be posting new content every week. If you have a question you'd like for me to feature just send it to me and maybe I’ll feature your question in an upcoming post.



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