When Can a Seller Keep Your Earnest Money Deposit?

If you're like many people, you know that when you offer to buy a home, you usually include an earnest money deposit. But when does a seller get to keep it? This guide explains. When Can a Seller Keep Your Earnest Money Deposit? To understand when a seller gets to keep an earnest money deposit, you must first understand what an earnest money deposit is for. An earnest money deposit is cash that you give a seller to show that you're serious about making the purchase. After all, you're asking the seller to take their home off the market so you can buy it, but the seller doesn't have any guarantee that the transaction will actually go through. Usually, an earnest money deposit totals between 1 and 3 percent of the home’s purchase price. The reason this deposit exists is so that the seller has some form of compensation if you back out of the transaction without a good enough reason to do so. So what is a good enough reason? That's where contingencies come in. What You Need to Know About Contingencies Contingencies are conditions that must be met before a transaction can go through. Contingencies affect buyers and [...]