3 Tips That Help You Protect Your Earnest Money When Buying a Rolla Home

Katherine Stanislawski
Published on July 31, 2016

3 Tips That Help You Protect Your Earnest Money When Buying a Rolla Home








Earnest money shows the Rolla home seller that you are serious about purchasing the property. The earnest money is applied towards the balance of the buyer’s down payment. Once the funds are deposited into a non interest bearing account it cannot be withdrawn or touched without the agreed written consent of both the buyer and the seller. The written agreement is called a mutual release.

Just like the terms and price of the property, the amount of earnest money is negotiable. The required amount of earnest money or deposit varies depending on the local real estate market and the state itself. If you are purchasing a bank owned property or a property that is being auctioned, there will likely be a required percentage that the earnest money will be based upon. However, in most typical transactions in the Rolla homes market, the earnest money can be negotiable. Keep in mind that it will not be popular with the seller if you put down much less than what is customary in the Rolla homes market. Your REALTOR® can help you determine what that amount should be.

You can get your earnest money back if the the contingencies are not met with satisfaction: inspections, appraisals and even contingent upon financing. You can also lose it if you’re not careful. Below are three top tips to protect your deposit.

Know the property


Every Rolla home, whether a new build or a historic Rolla home, should have an inspection before being sold. You should also include in your sales contract that the purchase is contingent upon all and any inspections you are required by your lender or any others that choose to have.

An inspector will examine everything from the roof to the foundation. Specialist inspectors can be called in to look for any pests, such as termites, or to go over the heating and ventilation systems. Even brand new homes should be thoroughly inspected. Better safe than sorry.

If the inspections reveal any issues, you will need to either ask the seller to do repairs, seller to give you a credit at closing (if allowable by lender) for repairs or negotiate on the sales price further. As the buyer you have the option to aslo decide whether to pull out of the deal or proceed as mentioned. Inspection contingencies are often quite vague and allow the buyer some room to withdraw from the deal and have the full amount of their earnest money returned with a signed mutual release.

Written loan approval and appraisal contingency

You will need written proof of your loan approval, and you will want to make sure the property is not appraised for less than the price you agreed with the seller. Be sure you have a loan approval and not a pre-qualification as they are not the same thing. Read more about WHAT YOUR MORTGAGE LENDER WISH YOU KNEW.

You should include a contingency clause that allows you, the buyer, to receive written confirmation of loan approval before progressing with the deal. If for some reason, your loan is denied you can walk away from the deal with your earnest money returned to you in full, with a signed mutual release.

Make sure you keep this contingency in place, even if you are struggling to get written loan approval from your lender. Loan providers can, and have, withdrawn funding at the last minute. Make sure you keep in close contact with your loan provider, and if necessary request an extension from the seller. If you sign off that you have been approved for a loan and are later denied funding, you risk losing your earnest money.

You should also include an appraisal contingency. If the property is appraised for less than the contract price with the seller you should keep the right to walk away from the deal with your earnest money intact, or at the very least renegotiate the agreed purchase price with the seller.

Go over the property disclosures








Most real estate markets require the seller to compile a list of disclosures that show the seller’s knowledge and experience of owning the property. In the Rolla homes market, the seller should provide you with a sellers disclosure and any and all of the following if they pertain to their property: pool/hot tub, water & sewage, pond & lakes, lead-based paint, and methamphetamine & controlled substances. The seller is required by law to reveal any defects, faults, or location issues that have or could have a negative impact on the property.

You should also have an opportunity to review any public records and reports, such as the building permit history or environmental hazard maps.

After your offer is accepted, but hopefully before you’ve submitted an offer, you should have viewed and signed that you have read any and all available disclosures. If you don’t like anything revealed in these disclosures, this is your opportunity to pass on the property before going any further.

Your earnest money will be at risk once you sign off, so make sure you ask questions, request additional documentation or reports, and carefully investigate anything that concerns you about the Rolla home you are considering.

Your hard earned cash is on the line









Depending on the price of the property, the buyer’s required earnest money can be a considerable sum. In addition to the earnest money, you also have the expenses of the inspections and appraisal on the line. So make sure that you proceed with caution and protect your earnest money as you progress towards closing on a Rolla home.



DSC_0017v4It’s prudent that you work with a Rolla REALTOR° that understands the contingency timelines and the seriousness of the real estate contract. After all, it’s your hard earned money on the line.

For a stress free home buying process work with me to find a Rolla home you love.


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