Earnest money - can I get it back?

Netflix
rejunk1001

Go to company page Netflix

rejunk1001
2d 36 Comments

Went into contract but want to retract from it as we are having second thoughts about it.

We paid 3% earnest money to get into the contract. Any options to get the money back now?

FYI - The house is in SJ/Santa Clara and we paid $1.5M.

#housing #earnestmoney #lender

comments

Want to comment? LOG IN or SIGN UP
TOP 36 Comments
  • This is exactly what the earnest money is for… to prevent a buyer from backing out “just because.” You need to find a reason stipulated in the contract that’s grounds for refund.
    2d 1
  • Netflix
    rejunk1001

    Go to company page Netflix

    rejunk1001
    OP
    We are having second thoughts because the appraisal came in $150k lesser and we have no funds at this point. And, we have requested for an appraisal rebuttal.
    2d 4
    • This is exactly what a financing contingency is supposed to cover. You waived the right to claim your earnest money back due to financing issues when you signed the contract. You can try to renegotiate, but the seller is under no legal obligation to modify what was already agreed to.
      2d
    • Oracle
      niij42

      Go to company page Oracle

      niij42
      This happened to me too.. you don't have to back out because of this .. you have two options ..

      See if you can go ten pc down and use the remaining to cover the gap

      Start with another lender who can close within a couple of weeks .. a lot of lenders can do that for you. If you believe the first appraisal was shitty then the second appraisal will give you a chance

      Meanwhile fight for a rebuttal with the original appraiser. But usually they are a bunch of rotten onions.. so you just don't get a win
      2d
  • Talk to a lawyer, you can wait indefinitely and hold up their sale
    2d 2
    • Amazon
      hsjcbof

      Go to company page Amazon

      hsjcbof
      WTF? Shouldn’t work like that. OP is creating a real loss to the seller. Maybe they needed the money to close on a purchase they are making, and now they will lose it.

      Or maybe the house prices tank this month, and they lose 500k because of OP’s second thoughts.

      If you don’t complete the sale by the agreed upon closing date, they will keep the earnest money and they will be free to list the house again. You can’t “hold up the contract”; there are no legal grounds for that.

      BTW, even if a lawyer found a loophole, you are inviting a very well-justified lawsuit. Don’t listen to these people OP. Just find a sensible way to solve this problem; maybe the sellers will return a fraction of the earnest money if you tell them right away.
      2d
    • Again, talk to a lawyer, in order to complete escrow, both parties have to agree. In terms of damages, they need to prove you caused damage, and earnest money is the cap on that damage.
      2d
  • PayPal
    aaaaabbbbb

    Go to company page PayPal

    aaaaabbbbb
    What makes the most sense is for the EMD to remain in escrow, for the sellers to put the house back on the market, and for the EMD to be returned only if the buyers receive a bid as high as yours. (And if they’re 10k away from yours, you’d owe 10k only).

    What can happen is that other buyers notice it went back on the market and wonder what’s wrong with it. So if that happens here, it could easily sell for 50k less.

    OP, what is the source of your “second thoughts”?
    2d 0
  • Amazon
    hsjcbof

    Go to company page Amazon

    hsjcbof
    The whole point of “earnest” money is that you have considered all eventualities and are willing to lose that money if you don’t complete your end of the bargain.

    They are giving up their home (even if someone offers them 1M extra next week, they can’t change the price to you). Likewise, you are giving up your right to walk away for free. You are within your rights to walk away, the price you pay is the earnest money.

    The reason why sellers pick buyers with waived contingencies is because houses sell a lot lower (could be 10%) when they return to the market. Plus, it brings a lot of stress to them, and they could need the money urgently.

    OP: I hope you manage to find another lender/appraiser on time; their process is quite random, so 5% fluctuations are very possible. Maybe your best bet is finding another lender altogether (so they don’t need to average the two appraisals). Also, you can suggest comps to them; they might use them.

    Another option to close the transaction might be to use a different loan type, such as ARM. These might have worse terms in the future, but might help you rescue the 50k
    2d 0