What is a Buyers Deposit? Do buyers lose their deposit if they back out of the contract? So typically in any real estate transaction there are two earnest money deposits that are put down. There is a first deposit and a second. Typically the first deposit ranges anywhere from $1000-$10,000. The second deposit is a more substantial amount typically put down after inspections are completed and that would be where the total deposits combined would be in the 5% to 10% range of the purchase price.
Let’s say you buy a $500,000 house, it would be typical in the state of Pennsylvania to have a first and second deposit totaling $25,000 or more. In a multiple offer situation you might see that be 10% which would be $50,000. This deposit money is put into an escrow account and all brokers are to hold the escrow deposit money and are required to follow the escrow laws of the state.
So the really big question here is when do I have to give deposit money back to the buyers? There are several ways that the deposit must be returned to the buyers and here are a few examples. If there is an inspection contingency and the buyers do not feel comfortable moving forward based on what was found in the inspection they have the right to terminate the agreement. If the buyer has a mortgage contingency and they were not able to obtain a mortgage They would have a denial letter from the mortgage company, the buyer would be able to terminate the agreement. Or if the seller is not able to give clear title the buyer could terminate the agreement.
With any of these scenarios, the sellers would have to sign a release of deposits and it’s really important to know that if the sellers do not sign this release the deposit the money cannot be dispersed to the buyer for 180 days or the number of days that is written into the agreement of sale. Now it’s important to note that on the seller side you want that number of 180 days as high as possible to protect yourself. Now let’s say you have a cash offer on your home and you have absolutely no contingencies does the buyer have the right to pull out and keep their deposit? Many times the answer would be no buyers do not have the right to keep the deposit. The seller would keep their deposit but the buyer needs to sign a release so the seller can keep that deposit money. Unfortunately, this doesn’t always happen where the buyers agree to sign this release and sometimes attorneys need to get involved. What is a Buyers Deposit? This is what Sellers really need to be aware of!
Please feel free to reach out at any time with any questions- Montgomery County PA Villanova 19085, Gladwyne 19035, and Delaware County Pa Wayne 19087. We are here to help! Kimmy Rolph sells the Main Line and local areas!
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