A real is contract can be a very tricky thing if not understood properly. Over the years I’ve done many transactions and one of my major concerns has been my clients earnest money deposit (besides other issues like termite, home inspection, financing and successful closing). Now earnest money deposit or EMD is a “good faith” to the seller that you’re a serious buyer and are ready to purchase this home. Recently, I’ve come across too many transactions where the buyer and even their agent don’t understand the term “Default” and how they could lose their EMD.
Most contracts have contingencies like home inspection, financing, home owners association disclosures, appraisal, etc. Typically, the only contracts I’ve seen without any contingencies are “as-is” cash transactions but even those could have title contingencies (but that’s a topic for another day). As a buyer there are many ways to save your EMD and walk away from the contract if the house has any issue EXCEPT ON THE DATE OF SETTLEMENT OR IF ALL CONTINGENCIES ARE REMOVED!
As a buyer, you have the absolute right to change your mind about purchasing a house but please keep in mind that your EMD may be at risk. Here is a paragraph from the Regional Sales Contract used by most agents in Northern Virginia:
So buyer’s, please make sure you understand how this works and make sure your Realtor is competent enough to help you properly void the contract and protect your EMD!
Whether you’re a buyer, seller or another real estate professional and need to understand all the complexities of the contract, give me a call at 703-577-4320 and I’ll be more than happy to explain everything to you!