A few days ago I wrote a post about what earnest money is and how much Seattle Home Buyers should offer in earnest money when making an offer on a home.  If you would like to read that post here is the link:

Earnest Money: How much should a Seattle Home buyer offer?

The next question my home buyers always have is:

After I make the offer, what are the situations that I can get my earnest money

back if I decide not to buy?

Seattle home buyer’s, in particular first time home buyers have a lot of fears around loosing their earnest money.  Fair enough.  Lets talk about the kinds of things you can include in your purchase and sale agreement that would allow you to get your earnest money back.

The biggest opportunity to walk away from a real estate transaction with no strings, is the inspection addendum.  The inspection addendum, allows you a period of time of your choosing, (usually a week to 10 days) to do any inspections on the home you like.  This can include, a whole house Inspection, pest inspection, sewer scope, lead based paint inspection, neighborhood review, etc.  During this time you can literally walk away from the home for any "subjective" reason of your choosing and have your earnest money returned to you.   The inspection addendum allows the greatest flexibility for a buyer.  This is why many of the other aspects of a real estate transaction don’t even kick into motion until this part of the purchase and sale agreement has been satisfied.

The next most common out for a buyer is the financing addendum.  The financing addendum specifies the nature in which you expect to pay for the home.  This is valuable information for the seller to know so they can have some confidence that you will be able to purchase the home.  It also allows you the opportunity to walk away from the sale if for some reason you don’t qualify for the specified financing prior to close.

So for example, if you state that you will be putting 3.5% down and qualifying for an FHA loan, and will be asking the seller to pay $8,000 in closing costs, but 10 days prior to the closing you find out you no longer qualify for the FHA loan, you can walk away from the offer and your earnest money will be refunded to you.

Title Addendum:  When property changes hands a title search will need to be done.  The results of that title search will show all parties that have any legal interest in the property.   If you include an title addendum in your purchase and sale agreement, you have the right to review that title report and if anything shows up on the report that you are not happy with, you have the right to ask the seller to correct it, or walk away from the home and have your earnest money returned to you.

If you are planning to purchase a condominium, townhouse or single home that includes a homeowners association, you also have the right to review what we call the CC&R’s. CC&R’s stand for the covenants, conditions and restrictions.  They specify the rules for living in a given community.  They include pet restrictions, restrictions on remodeling, painting, quiet hours, etc.  If you are purchasing a condo these will include recent minutes of the board meetings, and a spreadsheet showing where all the money from home owner dues are being kept and any special projects that are planned for the future.  This is all valuable information you will want to review and be comfortable with.  If you find that you can’t have your dog in your condo, you can rescind your offer and have your earnest money returned to you.

So there you have it.  Keep in mind that if something happens unexpectedly to you or your family and you need to walk away from an offer prior to closing, we can always request that the seller return your earnest money to you out of the goodness of their heart.  they are under no obligation to do so , but I have seen it happen.

Give me a cal if you need help.

Rob Graham, Accredited Buyer’s representative

Windermere Real Estate

206-321-6349

robgraham@windermere.com

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