Whether or not you can get your earnest money back is one of the questions realtors face most often.
What is Earnest Money?
Earnest money is essentially a deposit that you, as a purchaser, put down to safeguard the buying of your new home. This money deters buyers from backing out of the sale for no good reason. There are certain times, however, that you can definitely get your earnest money back if you back out of the sale. If your financing has fallen through, meaning there is no lender who will lend you the money for the home, you can claim your earnest money back. Another scenario would be if the home was appraised for less than you had expected. In this case, you would have to have an appraisal contingency beforehand.
So… What Happens With It?
Sometimes, people put an offer in on a home where the sale is dependent on whether or not they can actually sell their own, current home. To specify this in your offer, you would need to confirm a time period in which your home should be sold. If your house does not sell, you will get your earnest money back! In rare cases, a home seller will back out of the deal for no good reason. If this has happened to you, you will certainly be able to claim your earnest money back. The majority of home sales are dependent on a successful home inspection to determine the state of the plumbing, electrical, presence of mold, etc. If issues arise which cannot be fixed, this is another scenario where you would be able to get your earnest money back.
Are you buying new construction? Earnest money here is also required but if the building is taking longer than the builders originally specified, you will be able to back out of the deal and get your earnest money back.