While you'd like for no Cincinnati real estate purchase contracts to fall through, it does happen. Fortunately the failure rate is rather low.
And when a deal does fall through, one of the steps to releasing the deal is distributing the earnest money.
The earnest money is essentially a deposit made at contract acceptance to show the seller the buyer is serious about the purchase and doesn't plan to abandon the deal. However, the money does still belong to the buyer, and in most cases is applied as a credit when the sale is completed.
The earnest money may be held by the broker on either side of the deal as specified by the contract. In most cases if I'm repping the buyer I'm going to recommend our brokerage holds the funds.
Why? Just in case the deal does fail it is SLIGHTLY easier to return the money to the buyer if things go sideways later.
So what happens if the deal fails?
It depends on the reason the deal fails.
Within the typical Cincinnati agent's contract package are various gateways for the buyer that allow an exit without breaching the contract: HOA review, appraisal, inspections, financing. If any of those conditions are the cause of the deal to stop, then almost always the contract release form will specify the earnest money is full returned to the buyer.
If on the other hand the buyer just bails on the deal (cold feet, finds a "better" house), then most likely the buyer will agree to forfeit all (or a portion) of the earnest money to the seller.
Typically the earnest money is a modest amount, for starter homes probably not much more the $500. Head towards the luxury category and the amount may climb significantly.
It is usually in the best interest of the seller to quickly resolve the distribution and sign the release form. The quicker this is done, the quicker the seller will be back in the position to have their agent fully market the home and accept a new purchase contract.
When in doubt, consult with a real estate attorney for legal advice.
Interested in having us help you sell your home or help you buy a home? Just give us a call/text at 513-520-5305 or email Liz@LizSpear.com.
We look forward to hearing from you!
Bill of Bill & Liz aka BLiz
Serving Warren County Ohio & Adjacent Areas
The Liz Spear Team of RE/MAX Elite
Elizabeth Spear, ABR, CRS, Ohio License SAL.2002007747
William (Bill) Spear, CRS, Ohio License SAL.2004011109 Kentucky 77938
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