Top 7 Ways to lose your Earnest Money
    • Back out of the contract after the option period has expired.
    • Fail to qualify for financing after the option period and after the 3rd party financing addendum protections have expired. If you have not done so, you should complete your loan application ASAP after you have an accepted contract.
    • Change your mind on new construction after signing with a new home builder – you also stand to lose money contributed for options and selections on the home paid for in advance. Builders do not typically have option periods.
    • Builder goes bankrupt before completing your home. I’ve seen it happen. Here’s a post dedicated to 70 builders that have had major financial issues… and a list of ailing builders.
    • If your Title Company goes bust – I’ve seen it happen where the title company goes under delaying or killing deals entirely. It’s a huge headache trying to get that money back. Make sure your Title Company is financially healthy.
    • If you have no Option Period, you do not have the unilateral right to terminate the contract without consequences. Even if your contract states you will have an option period, you might not actually have one. The TREC promulgated form in Texas states that the money paid by a buyer in exchange for an option period MUST be delivered within 2 days. If this does not happen, the Option Period is stricken from the contract and the buyer will lose their Earnest money if they do not complete the contract through to closing.
    • Fail to close – There are so many reasons you might fail to close.

Does anyone else have any other ways to lose your earnest money?

© 2009 Brian Worrell, Realtor in League City, TX. All Rights Reserved.

 

© 2004 - 2011 Brian Worrell Team, Realtors in League City and Clear Lake, TX - 281-948-7042. All Rights Reserved. LeagueCityBlog.com.  Bayou Properties Realty.

 
Post is included in group: Active Rain Block Party
Post is included in group: Active Rain Newbies
Post is included in group: All Thing's Texas
Post is included in group: Dedicated Bloggers
Post is included in group: Diary of a Realtor

4 Comments on Top 7 Ways to lose your Earnest Money

MAR
05
2009
586,444 Points 4 Featured Posts Outside Blog Called Shot Master

Brian,

You will not loose your earnest money "if your Title Company goes bust".  That money is insured by the Texas Department Of Insurance", it may take some time but you will get the money.  I do agree with all you other reasons.
4:35am • #1
Localism Sponsor

Earnest money here in Ohio is so confusing to deal with.  I have a situation where I am the listing agent, we held a condo in contract for 2 months because the buyer was working on financing which feel through.  It is a short sale the $1000 60 day close period went by so my client only stood to make 750 and the buyer is refusing to release the earnest money so it is being held in my broker account until we can get the two parties to agree what should happen.  It is a real pain.
6:06am • #2

Good post; I think this list should be handed to every client at the initial consultation. I'm sure it would help weed out the "tire kickers" from the really sincere buyers.
8:03am • #3
177,370 Points 2 Featured Posts Outside Blog

Richard - You may not lose it permanently, but I've seen it take months to get it back when properties were set to close and United Title went under.

Vanessa - I had a similar case here in Texas of a seller refusing to sign the release of earnest money when a buyer opted out during the option period.  We had to write a letter of demand per the contract and literally demand that the title company release the money back to the buyer without needing permission from the seller to do so.

Ken - and especially cover this with your buyers...
1:54pm • #4

Login or register to leave a comment
 
Brian26apr Rainmaker_large

League City, TX - Worrell Team, REALTOR, GRI, CNE

League City, TX

More about me…

Bayou Properties Realty

Address: 16821 Buccaneer Lane, Suite 106, Houston, TX, 77058

Office Phone: (281) 948-7042

Cell Phone: (281) 948-7042

Email Me

Author Bio: Brian Worrell, leader of the Worrell Team, is a Realtor specializing in League City, Clear Lake and surrounding areas in the SE Houston Metro area, also known as the Houston Bay Area. Brian grew up in the Houston area and received a BBA in Marketing from the University of Houston. He and his team strive to provide their clients high-end service in order to gain advantages through unique marketing techniques that have proven effective: cutting edge technology, search-engine optimized web marketing, formal negotiation training, commercial and economic understanding of their clients’ best interests, professional photography, access to legal counsel, as well as other services and techniques that are unique in the industry.

League City and Clear Lake Realtors

© 2004 - 2011 The Brian Worrell Team, Realtors in League City and Clear Lake, TX - 281-948-7042. All Rights Reserved.



Listings

Links

Archives

RSS 2.0 Feed for this blog