14.3% of homes that went under contract in January 2025 failed to close.[1]
What happens after depositing?
Option 1. Applied to Purchase Price
Upon the successful purchase of the property, an earnest money deposit is applied to the sales price at closing.
Option 2. Refunded to the Buyer
Earnest money is commonly refunded to the buyer when:
- Contingencies not met.
- Unsatisfactory inspection within the specified period.
- Buyer’s inability to obtain financing.
- Appraisal amount not met.
- Title issues appear.
- Seller backs out.
- Mutual agreement to terminate.
Option 3. Seller is Paid the Earnest Money
This is common when the buyer conducts the following actions:
- Decides to back out.
- Fails to meet a contingency.
- Misses a deadline.