Once you have agreed to purchase a home you will have to put down an earnest money deposit. This deposit is usually 1% of the home's price and it is there to protect the seller in case you back out of the deal. If you choose not to buy the home you can lose this deposit. However, there are instances where you should walk away with the earnest money deposit in your hand; below we cover six different reasons:

You can't get the financing required: With a financing contingency in place you give yourself more time to find a lender. The average financing contingency time frame is about two weeks. If in two weeks all of the lenders have denied giving you a loan then you can break the deal and taking back the earnest money deposit. If however, you have been offered a mortgage but at a much higher interest rate than you either seal the deal or walk away without the earnest deposit.

You can't sell your current home: It is quite common for an individual to find themselves at the same time trying to buy a new home and sell their current one. Many in this situation do not know what should be done first. In that case it is best to have a sale contingency. This sale contingency will ensure that you will only buy the new home if you manage to sell your current one within a given time frame. The time frame depends on the location and the real estate market that's why it is best to speak with your agent.

House appraisal less than expected: Prior to making an offer on the home, you should include an appraisal contingency. With the appraisal contingency in place you are only required to pay the appraised value.  If the appraisal value is lower than the home's price, with the appraisal contingency in place it will give you room to negotiate; you can ask the seller to pay for the closing costs or to include some of the furniture and appliances as part of the deal. If in the end an agreement can not be reached, you can walk away with your earnest money deposit.

Surprise! the home has a major flaw: The home inspection clause will protect you and your earnest money deposit. By law the seller is required to reveal certain flaws within the home. If however, the home inspection shows major issues with mold, pollution, electrical issues or problems with the foundation you have a few options you can take; you can negotiate a lower price because you'll need the extra money to fix all of this, or you  can walk away.

Your new home is not complete: The day has come for the transfer of ownership but the house is still not built. The builder will likely want you to move in regardless, but hold your ground and back out taking your earnest money deposit with you.

The seller backs out: The seller may have multiple offers, and if you already have a sale contingency in place – the seller may have found another buyer who can buy their home right away. In this situation you are entitled to your earnest money deposit back.

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