Earnest Money, Please!

Real Estate Agent with Atlanta Communities 303302

When real estate transactions occur, most times money is put up to show the buyer is earnest in their intent to buy. Usually this money will be returned to the buyer if they decide to terminate their contract before their due diligence, or free look time period runs out. If the buyer continues with the contract, this money will go towrds the purchase of the home.

This is all well and good if everything happens as it should. But what happens if the buyer does not deposit the earnest money as required by the contract within the time limits given? Sellers get very nervous and the agents send around paperwork notifying everyone of the delay. Usually that takes care of the problem and the earnest money gets deposited, albeit late.

Now the big problem. What happens if the earnest money does not come in and the buyer terminates the contract after their due diligence time frame? The buyer is on the hook for the money which is now due to the seller. If the brokerages cannot cajole the buyer to comply, attorneys may now get involved. The buyer is in default on the contract. The hard part now is bringing a legal action against the buyer. If the seller chooses to pursue the buyer through legal means, the contract along with all timelines will become very important. These cases happen rarely, but when they do, they can be a mess to clean up.


Posted by

Peter den Boer, Associate Broker, Realtor

Atlanta Communities Real estate Brokerage


Ph. 770.713.1545



I write about daily life as a Realtor in the Towne Lake Community in Woodstock Georgia.

Comments (4)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Hello Peter den Boer this is very good report about earnest money.

Oct 04, 2021 02:47 PM
Jim Patton
Aspire Home Real Estate 209-404-0816 - Modesto, CA
Realtor - Stanislaus ,Merced, San Joaquin Counties

Good information Peter den Boer.  Hopefully things don't get to the attorney stage.  At that point the only likely winner is the attorney.

Oct 04, 2021 03:39 PM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Jim - your post reminds me that there are not enough reasons to use cajole in everyday language - it certainly "fits" for some in this example.  

Oct 05, 2021 03:31 AM
Michael Jacobs

Oops - Peter den Boer - I mistakenly addressed you as Jim in my comment where I should have paid better attention.  It's been a week now and the comment edit function doesn't allow me to change it.  I apologize but those kinds of things happen.  

Oct 11, 2021 05:52 AM
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

As long as the buyer and seller adhere to the terms of the contract there shouldn't be any dispute as to who receives the earnest money should the contract terminate.

Oct 05, 2021 04:56 AM