Homebuying in Ohio: Earnest Money Checks and Deposits
Buying a home in Northeast Ohio?
Many steps in the homebuying process are pretty universal — getting pre-approved for a mortgage, ordering an appraisal, purchasing title insurance. However, some states like Ohio have a unique tradition called earnest money.
If you’re planning to purchase a home here, you’ll want to familiarize yourself with this part of the real estate transaction.
What is Earnest Money?
In some real estate transactions, earnest money is an extra deposit made at the very beginning of the closing process to the current property owner that demonstrates “good faith” that you seriously intend to purchase from them.
This non-refundable deposit acts as a sort of insurance policy for the seller as they follow steps towards closing such as title searches, home inspections or repairs. This way, if you choose to walk away from a real estate deal, the seller can recoup some costs.
When you’re ready to deposit earnest money, you are indicating that you are very serious about buying a home. You should always consult with your realtor to decide if this is the right next step.
Is Earnest Money Always Non-Refundable?
Usually, earnest money is a non-refundable transaction, but there are a few situations where you could get your money back for problems that are not your fault.
These include issues with the property such as:
· A failed inspection
· Bad appraisals
· Severe damage before closing
· Mortgage funds becoming unavailable
· A tragedy in the buyer’s family or personal life
Pro tip: if you’re concerned about what could happen with your earnest money, talk to your realtor about how to handle the “worst case scenario.” In these situations, your realtor can act as an advocate for you, appealing to the bank and even local government to help you get back the deposit.
In the end, earnest money checks aren’t meant to be a trap. They symbolize a promise between the buyer and seller, and good-faith agreements can be flexible if both parties know and trust each other.