Here’s When You’ll Actually Get Your Earnest Money Back
When you make an offer on a Knoxville home, you’ll put down earnest money as a sign of good faith.
Earnest money is what you stand to lose should you try to walk away from the contract for any reason than is what is outlined in the contract.
There are certain situations where you will forfeit your earnest money and there are certain situations where you’ll get your earnest money back. In this post, we’ll look at a few different scenarios when you’ll get your earnest money back.
You Can’t Secure Financing
Even when you get pre-approved with no problem, problems can arise along the way that could prevent from getting final loan approval. If something changes with your finances, it can be scary to think you may have to forfeit your earnest money. The good news, though, is you probably won’t.
Most contracts include a finance contingency clause. If you get laid off from your job or if something changes with your credit, a finance contingency clause protects you when you no longer can be approved for a loan.
The Home Doesn’t Appraise
When a home doesn’t appraise, if you’re unable to come up with a solution with the seller, you are able to get your earnest money back. That is if you contract includes an appraisal contingency.
A lender will want to make sure an appraisal is performed on a property. They do this to ensure that they’re not lending out any more money than they have to. When a home doesn’t appraise, you’ll need to work out a solution with the seller. If you cannot, you can walk away with your earnest money.
The Home Has Lots And Lots Of Issues
Until a home inspection is completed, there is no telling what kind of issues a home can have including rampant mold issues, a leaky roof or a faulty foundation. And, there are certain times where a home has more issues than what you may want to take on.
Most contracts include an inspection contingency clause that protects you if there are inspection issues. If you’re unable to negotiate repairs with a seller or if the home inspection is altogether too scary, you’ll be able to walk away with the transaction and still keep your earnest money.
The Sale Of Your Home Falls Through
Finally, you’ll also be able to get your earnest money back if the sale of your home falls through. Oftentimes, buyers need to sell a home before they’re able to buy, so there’s often a contingency that protects you if a sale of your home falls through.
Real estate transactions can be unpredictable. There is no telling what the appraisal or home inspection may find. Luckily, that’s why a home sale clause exists. You’ll get your earnest money back if the sale of your home falls through.
Are you thinking about buying a home this year? Please let Knoxville Home Team know if there is anyway that we can assist you in your Knoxville home search. Rick can be reached at 865-696-9002 or via email at Rick@KnoxvilleHomeTeam.Com. Kati can be reached at Kati@KnoxvilleHomeTeam.Com.
Also, be sure to check out our Knoxville Home Search Page to see what homes are for sale in the area.