Home Buying in Hopkinton>Question Details

Janet, Home Buyer in Travis County, TX

do I put money down to make a contingency offer and if so, do I get it back if we don't buy it?

Asked by Janet, Travis County, TX Mon Aug 22, 2011

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This is a perfect example of how using the services of a realtor can make you feel much better about each of the steps in the home buying process. Typically, your initial money down with offer is refundable based on contingencies stated in the offer. This refund is based on a reasonable decision and not because you just decided to back out of the deal. Once you enter into the Purchase and Sale, any contingences must be documented and include a corresponding date. If that date is not carefully watched and the the time passes, you may not be able to get your money back. This holds true for non contingent offers as well. A good partner/realtor will guide you through every step.
1 vote Thank Flag Link Tue Sep 27, 2011
Most deals have what is called a good faith deposit delivered to the sellers agent or attorney at the execution of the offer contract (can be anywhere from $500 and up depending on how competitive you want to make the offer look to the seller). Then there is usually about a 2 week due diligence period (you have your inspection and hire an attorney to review doc's, etc) and if everything is satisfactory you put another good faith deposit down with the execution of the Purchase and Sale contract (usually a much larger check, anywhere from 2.5-10% of the purchase price, again, depending on how competitive you want to make your offer look) You will get your money back ONLY if a term in your offer or PS contract (contingencies, etc) give you the out and that will all depend on the language of those contracts. Usually if you just arbitrarily decide to walk on the deal you will lose your deposits (this protects the sellers since generally speaking purchase contracts are very buyers protective)

MA is a 2 contract purchase process but it may be different if you are buying in another State.

I hope that helps!! Hire a good exclusive buyers agent to walk you through the process. If you work with the listing agent they will be very limited on what advice they can give you.
Web Reference: http://territory.com
0 votes Thank Flag Link Tue Oct 4, 2011
****Massachusetts laws are very different. ***
You need to speak to you attorney regarding possible outcomes. There is an offer to purchase and then a purchase and sales contract.
0 votes Thank Flag Link Mon Aug 22, 2011
Hi Janet,

Yes, sellers ask for an Ernest Money Deposit (EMD) when you submit your offer. This is usually 1%-2% of the purchase price (but you can do any amount you want to). As long as you have contingencies included in your offer and you do not remove them in writing, you should get your full EMD back if you cancel contract - as long as the reason you cancel is an acceptable one per your purchase contract.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Mon Aug 22, 2011
Yes, if you're referring to an offer that's contingent on some factor, such as your ability to obtain financing or your selling your current home.

And if you mean an earnest money deposit.

It's just the same as a non-contingent offer. You make an offer accompanied by an earnest money deposit. The only difference with a contingent offer is that you have some additional "outs." In a non-contingent offer, for instance, you'd be expected to go through with the purchase even if you weren't able to obtain financing. If your offer is contingent on obtaining financings--and you aren't able to--then the deal is called off.

However, to oversimplify a bit, you get your money back if the reason for your not buying is: (1) the fault of the seller, or (2) covered by one of the contingencies. But you can't just "change your mind." Example: You make an offer accompanied by a $2,500 earnest money deposit. The seller accepts your offer. You're approved for financing; the house appraises for the sales price. Then you get cold feet and just want to back out. In that case, your earnest money deposit is at risk.

Check with your Realtor for more details.

Hope that helps.
0 votes Thank Flag Link Mon Aug 22, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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