b article - how you can Lose Your Deposit

HOW YOU CAN RISK LOSING YOUR DEPOSIT

Seal the deal, but safeguard your steps!

Whether it’s fewer contingencies, early releases, or inspection-free buys, quick decisions in hot markets could risk your Earnest Money Deposit (“EMD”).

FAILING TO MEET DEADLINES. As a buyer, upon signing a purchase contract, you commit to a specific timeline that includes home inspections, mortgage commitment, addressing contingencies, and the final closing. You can jeopardize the entire transaction if you fail to meet these critical deadlines. Should you fail to meet the contract’s terms, sellers may have the right to seek a new buyer and retain the Earnest Money Deposit (EMD). It’s crucial to ensure that you as a buyer are progressing smoothly through the transaction process. I help the buyers to fulfill their contractual duties on time through effective transaction coordination.

GETTING CAUGHT UP IN A BIDDING WAR. We’ve navigated markets where low inventory leads to multiple offers and intense bidding wars for each new listing on the MLS. In such a competitive environment, you as a buyer might feel pressured and that may lead you to hastily make offers on any available property. To make your offer more appealing, you might even propose higher than usual Earnest Money Deposits (EMDs). However, if you later decide the home isn’t the right fit, this decision could cost you thousands if you withdraw from the contract. It’s important that you have someone on your side to guide you through these high-pressure situations with a calm and steady hand, helping you avoid such costly mistakes.

AGREEING TO A NON-REFUNDABLE EARNEST MONEY DEPOSIT. In certain situations, particularly with bank-owned or investment properties, buyers might be asked to provide a non-refundable Earnest Money Deposit (EMD) to demonstrate their commitment to completing the purchase. If you are certain about your financing and the fulfillment of other contract obligations, this could be a worthwhile step for you. HOWEVER, it’s crucial for you to fully comprehend this aspect of the contract before you proceed with the EMD, acknowledging that it won’t be refundable. BE 100% CERTAIN BEFORE COMMITTING TO NON-REFUNDABLE EARNEST MONEY DEPOSIT

WAIVING CONTINGENCIES PREMATURELY. In a competitive market with multiple offers, it’s natural to worry about overburdening the sellers with demands, leading you to include fewer contingencies in your offer. Similarly, after entering into a contract, you might incorrectly believe certain conditions have been met and release these contingencies too soon. Both scenarios risk reducing the protection that contingencies offer. This could result in a contract being terminated or an earnest money check being voided, ultimately leading to the forfeiture of your Earnest Money Deposit (EMD).

FAILING TO DO DUE DILIGENCE. Whether you are an investor or simply someone looking for a great deal, and you stumble upon an attractive offer, you might rush into a contract, foregoing a home inspection or other critical due diligence steps. Indeed, many investors see the promise of a swift, inspection-free transaction as a key advantage they bring to the table. However, should you later discover significant and expensive issues with the property, you might be forced to forfeit your Earnest Money Deposit (EMD) to exit the contract.

LOVE WHERE YOU LIVE

Kasia Karolewska, Sales Associate

Coldwell Banker Associate