11/03/2026
EARNEST MONEY.
(I know it's a long read, but it's important. Please don't be the buyer who changes your mind, decided you don't want to mow the lawn or realized the stairs are too steep. Now you want out of the contract and want your earnest money back.)
Sellers assume a big risk when they accept an offer from a buyer. Because offers indicate that buyers intend to go through with the purchase, sellers essentially take their home off the market when they accept an offer. Then sellers sit back and wait for buyers to have an inspection, obtain an appraisal, and (usually) secure a loan.
As you can imagine, many things can go awry during this process, and buyers usually include contingencies in their offers, reserving the right to back out at various stages (e.g., if the property doesn’t appraise, if there are repair issues that can’t be negotiated, if they can't get financing). Contingencies protect buyers from being legally forced to buy the property if the contingencies aren’t met.
But what happens when all of those hurdles have been cleared, all contingency deadlines have passed, and a buyer backs out anyway? That's a really unfortunate position for a seller, who's significantly harmed. The house has to go back on the market, and weeks of marketing time have been lost. The seller's own purchasing plans for their next home may also be impacted.
Sellers need compensation for this hardship. And that's where buyers' earnest money comes in, which sellers can claim as liquidated damages if buyers breach the contract.
