When you buy a Knoxville home, you’ll put earnest money down when you make an offer. Earnest money is what shows that you’re serious about buying a home.
Depending on the situation, earnest money is what you stand to lose if you walk away from a transaction. There are certain situations where you’ll get your earnest money back and certain situations where you won’t get your earnest money back.
In this post, we’ll examine 3 situations where you stand to lose your earnest money when you buy a Knoxville home.
When you decide to make an offer, it’s imperative that your mind is made up. There is no room for being wishy-washy, otherwise you open yourself to losing your earnest money.
Unfortunately, there is no clause in a contract that protects a buyer when they change their mind about buying a house. If there are no issues with the inspection or with financing, you will lose your earnest money when you change your mind for absolutely no reason.
In this situation, the earnest money is there to protect a seller from wishy-washy buyers. Earnest money is what either party in a transaction stands to lose if they don’t hold up their end of the bargain.
Once an offer is accepted, there are certain things that a buyer must do in order to hold up his or her end of the bargain.
There are certain timelines that exist in a contract to ensure the transaction moves forward. For example, a buyer must complete their loan application within 3 days of offer acceptance. Or, a buyer must also complete their home inspection within certain amount of time, depending on what the contract states.
As a buyer, if you fail to uphold your end of the bargain on items included in the contract, you may be at risk of losing your earnest money.
Sometimes, buyers will waive certain contingencies in a contract that are meant to protect them, in order to make their offer more appealing to a seller. This can sometimes be a dire mistakes.
In Tennessee contracts, there is a financing contingency and inspection contingency that are meant to protect a buyer. If a home has a bad home inspection, a buyer is able to walk away and receive their earnest money back. Or, if a buyer is unable to secure financing, he or she is able to walk away and get their earnest money back.
As a buyer, if you opt to waive these contingencies, you put yourself at risk of losing your earnest money. Before you consider waiving these contingencies, it’s important that you fully understand the protection you’re giving up.
Earnest money is there to protect both parties in a transaction, should either one decide to not hold up their end of the deal. Prior to signing off on an offer, it’s imperative you have a clear understanding of the situation where you can possibly lose your earnest money.
Are you thinking about buying your first Knoxville home this year? Please let us know if there is anyway that Knoxville Home Team can assist you. Rick can be reached at 865-696-9002 or via email at [email protected]. Kati can be reached at [email protected].
You can start your home search today on our Knoxville Home Search Page.