Earnest Money Deposit in Contract
Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes
Is the buyer still on the hook to owe for a breach of contract? I ask since a potential buyer is backing out outside the timeline of when the earnest money was due on one of the properties I have listed. My agent is already working on putting this property back on market just to get it back in front of other interested buyers.
Is the buyer still on the hook to owe for a breach of contract? I ask since a potential buyer is backing out outside the timeline of when the earnest money was due on one of the properties I have listed. My agent is already working on putting this property back on market just to get it back in front of other interested buyers.
Is the buyer still on the hook to owe for a breach of contract? I ask since a potential buyer is backing out outside the timeline of when the earnest money was due on one of the properties I have listed. My agent is already working on putting this property back on market just to get it back in front of other interested buyers.
Is the buyer still on the hook to owe for a breach of contract? I ask since a potential buyer is backing out outside the timeline of when the earnest money was due on one of the properties I have listed. My agent is already working on putting this property back on market just to get it back in front of other interested buyers.
Makes sense. I'll be more direct about receiving it, in the beginning, to really lock in potential buyers and to know that they are serious rather than wasting anyone's time.
Yeah. I don’t think you are “in contract” until the earnest money is deposited.
If they come back and you are desperate/have other offers make their EMD immediately non-refundable before you accept their offer. If you're getting other offers MAYBE roll the dice with them again.
Yeah. I don’t think you are “in contract” until the earnest money is deposited.
If they come back and you are desperate/have other offers make their EMD immediately non-refundable before you accept their offer. If you're getting other offers MAYBE roll the dice with them again.
Thanks for the clarification. I'll be sure to state earnest money upfront in the next offer.
Before I chime in please note that every state and area may be different, so I'm speaking in general terms. I'm not an attorney and you seek one if this is of concern.
You are generally officially in escrow once everyone signs off on the purchase contract and applicable counter offers. Whether there is an EMD (earnest money deposit) or not does not matter. It's the paperwork that solidifies it.
The purpose of the EMD is IF all contingencies are released and then the buyer cancels on their own accord, then you as the seller would have contractual rights to keep it. There can be exceptions.
If they cancel and they still had contingencies, then I wouldn't fight the deposit because they would be getting it back anyways. If all contingencies were released and you would be entitled to the money, then it becomes a business decision if you want to pursue it further. It just depends on your appetite.
If you are in a hot market, I've heard that a judge may rule in favor of the buyer only because if you enter escrow quickly with another buyer, then you didn't really incur any damages other than loss of time. I would argue you did because of carrying cost but I'm not an attorney.
Before I chime in please note that every state and area may be different, so I'm speaking in general terms. I'm not an attorney and you seek one if this is of concern.
You are generally officially in escrow once everyone signs off on the purchase contract and applicable counter offers. Whether there is an EMD (earnest money deposit) or not does not matter. It's the paperwork that solidifies it.
The purpose of the EMD is IF all contingencies are released and then the buyer cancels on their own accord, then you as the seller would have contractual rights to keep it. There can be exceptions.
If they cancel and they still had contingencies, then I wouldn't fight the deposit because they would be getting it back anyways. If all contingencies were released and you would be entitled to the money, then it becomes a business decision if you want to pursue it further. It just depends on your appetite.
If you are in a hot market, I've heard that a judge may rule in favor of the buyer only because if you enter escrow quickly with another buyer, then you didn't really incur any damages other than loss of time. I would argue you did because of carrying cost but I'm not an attorney.
Thanks for the heads up. The buyer literally came all the way to the closing date and decided to back out, which is an inconvenience for me since I could've just put it back on market asap. No earnest money was receive after the contract states that it should have been received after the 7 day inspection period was met. I think it was just bad etiquette on the buyer's part the whole way, which I don't really want to keep my head on it, so I've just decided to move on to the next one. Just wanted to see if it would even be worth the time.
Before I chime in please note that every state and area may be different, so I'm speaking in general terms. I'm not an attorney and you seek one if this is of concern.
You are generally officially in escrow once everyone signs off on the purchase contract and applicable counter offers. Whether there is an EMD (earnest money deposit) or not does not matter. It's the paperwork that solidifies it.
The purpose of the EMD is IF all contingencies are released and then the buyer cancels on their own accord, then you as the seller would have contractual rights to keep it. There can be exceptions.
If they cancel and they still had contingencies, then I wouldn't fight the deposit because they would be getting it back anyways. If all contingencies were released and you would be entitled to the money, then it becomes a business decision if you want to pursue it further. It just depends on your appetite.
If you are in a hot market, I've heard that a judge may rule in favor of the buyer only because if you enter escrow quickly with another buyer, then you didn't really incur any damages other than loss of time. I would argue you did because of carrying cost but I'm not an attorney.
Thanks for the heads up. The buyer literally came all the way to the closing date and decided to back out, which is an inconvenience for me since I could've just put it back on market asap. No earnest money was receive after the contract states that it should have been received after the 7 day inspection period was met. I think it was just bad etiquette on the buyer's part the whole way, which I don't really want to keep my head on it, so I've just decided to move on to the next one. Just wanted to see if it would even be worth the time.
I would also have a conversation with your agent. There is no reason why your agent didn't follow up on this early on. It was a red flag that they didn't submit a deposit. It means they likely never intended to.
Before I chime in please note that every state and area may be different, so I'm speaking in general terms. I'm not an attorney and you seek one if this is of concern.
You are generally officially in escrow once everyone signs off on the purchase contract and applicable counter offers. Whether there is an EMD (earnest money deposit) or not does not matter. It's the paperwork that solidifies it.
The purpose of the EMD is IF all contingencies are released and then the buyer cancels on their own accord, then you as the seller would have contractual rights to keep it. There can be exceptions.
If they cancel and they still had contingencies, then I wouldn't fight the deposit because they would be getting it back anyways. If all contingencies were released and you would be entitled to the money, then it becomes a business decision if you want to pursue it further. It just depends on your appetite.
If you are in a hot market, I've heard that a judge may rule in favor of the buyer only because if you enter escrow quickly with another buyer, then you didn't really incur any damages other than loss of time. I would argue you did because of carrying cost but I'm not an attorney.
Thanks for the heads up. The buyer literally came all the way to the closing date and decided to back out, which is an inconvenience for me since I could've just put it back on market asap. No earnest money was receive after the contract states that it should have been received after the 7 day inspection period was met. I think it was just bad etiquette on the buyer's part the whole way, which I don't really want to keep my head on it, so I've just decided to move on to the next one. Just wanted to see if it would even be worth the time.
I would also have a conversation with your agent. There is no reason why your agent didn't follow up on this early on. It was a red flag that they didn't submit a deposit. It means they likely never intended to.
I ended up moving on from this one as another backup offer was ready to go. I informed my agent to get ahead of this on the next one to avoid having this issue again. Just wish the other buyer stuck with the contract.