I know that it is supposed to be a form of insurance so that the seller knows that the buyer is sincere about going through with the deal. But I recently had a home where the buyer simply said that they were terminating the offer because the house didn’t pass inspection. Although they never really had an inspection done, they just wanted out of the contract. I could take them to court and possibly make them fulfill the contract, while in the meantime I can’t take any other offers on the house. So I had to mutually agree to terminate the contract and give them back the earnest money.
So what’s to keep a buyer from simply walking away from a deal, and simply saying, “if you want to sue me, than sue me. In the meantime you can’t sell your house.” So you might as well give me my money back. If you set the earnest money high enough to discourage this problem, you also discourage a lot of potential buyers.
So how often do buyers actually have to forfeit the earnest money?
Here’s the problem ace. If I say no you can’t have the earnest money back, than they’ll simply say that they’re terminating the contract because the house didn’t pass inspection. In which case they get the earnest money back.
acer, how many times have you known the seller to actually end up forfeting the earnest money?