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What Happens to the Earnest Money on My Contract?
What Happens to the Earnest Money I Submitted? Most buyers ask if the check will be cashed or held until closing? Buyers want to know if they get the money back if they change their minds. They want to know if the offer doesn't go through will they get their money back. What if the seller doesn't fulfill their part of the agreement? These are valid questions and the agent should answer them according to state laws and rules. In Tennessee, there are strict rules as to what happens to earnest money and how it is to be disbursed. Where does the earnest money go? First you must understand what earnest money is. It is a show of good faith to the seller. In other words putting your money where you mouth is. An offer with substantial earnest money gets the attention of the seller. It shows that the buyer has skin in the game and has some financial strength and is taking a risk, too. State law in Tennessee says if the broker holds the money it must be deposited promptly into the broker's escrow or trust account. This account is set up solely to hold client and customer money. It can be held by either the ... more
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