Frequently Asked Questions
WHAT HAPPENS TO MY INITIAL DEPOSIT?
Your initial deposit is required to be deposited with the escrow company within 3 days of an accepted offer. The escrow company will deposit the funds into an escrow account until closing. At closing, the amount of the deposit is credited towards the total amount of money you will need to bring in to close the escrow. If you decide to cancel the contract per the terms of the agreement, then you will be entitled to the return of your deposit, less any costs that you incurred during the escrow.
CAN I LOSE MY DEPOSIT IF I CANCEL?
Real estate contracts are complicated legal transactions. This is an area where having a knowledgeable and professional agent is a necessity. Rarely does the buyer lose their deposit. Most often, if a transaction falls apart, it is due to circumstances beyond the buyer's control. These can include property condition, low appraisal or inability to obtain financing. However if the buyer operates in bad faith or willfully decides that they no longer want to buy the house and cancels the contract with no legal reason for doing so, then the seller may have the right to retain the buyers deposit.
WHAT IS A CONTINGENCY?
A contingency is a clause in the purchase agreement that allows the parties to back out of the contract under certain circumstances. For a buyer, there are 3 main contingencies: Inspection, Appraisal and Loan. The timeframes for each contingency are negotiated in the contract. Once a buyer actively removes the contingency, they put their deposit at risk if they subsequently cancel the contract for a reason related to that contingency. This is another reason why it is important to work with a knowledgeable agent that can guide you through the process.
WHAT IF I NEED TO SELL MY HOME BEFORE I CAN BUY A NEW ONE?
Having a home to sell adds another layer of complexity to your transaction. In this case, it is important that we meet early in order to discuss a plan based on your timeframe and goals. It is possible to make an offer on a replacement home "contingent" on the sale of your current home. However, a buyer in this position may not have the same negotiating power as a buyer that does not have a home to sell.
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