Earnest money put down in a real estate sale but when do I lose my deposit buying a house in Maine?
This property listing blog post covers the situations when the money put in a real estate broker’s trust account is lost, returned to the buyer. Or the times when deposits on a house get forfeited to the seller. When despite the best efforts, a property sale just goes south. And the sit down for the pass the keys please is not happening at a real estate closing.
This is a “when do I lose my deposit buying a house in Maine” blog post. It will also cover the situations where it’s not cut and dry simple what happens to the earnest money deposit.
When the earnest money put down in good faith to take a property off the real estate market becomes a real bone of contention. Instead of going all to the seller for liquidated damages or back to the buyer for nice try, but sale just not going to happen. There are times when the earnest money deposit gets split in two. Returned to both the buyer and seller in a failed Maine home sale.
For starters, let’s back it up and explain what is a deposit on a Maine house.
Why the need for earnest money funds in buying a house in Maine? The put your money where your mouth is deposit shows the seller I want the property. But it takes time to get financing, to examine the real estate title. To clear bank mortgage underwriting. To get ready for the pass the real estate deed while I hand over the rest of the purchase price money.
The deposit also has a purchase and sale agreement contract attached to it spelling out the conditions of the sale, the time table for the Maine real estate transfer.
If you are the seller of a house in Maine listed for sale and actively marketed in the search for a real estate buyer. You don’t want to stop searching for a buyer until money is put down in good faith to show a ready, willing and able buyer has come along to make the purchase. To entice the owner of the home to stop looking for a buyer for the property, earnest money or consideration is put down.
The earnest money deposit on the home is a sign, to show the seller as a good faith gesture.
That you the house buyer are putting your hard earned money on the bar to show you are serious. The deposit on a home shows the seller that you mean business and intend to purchase his or her property. A dollar is enough earnest money deposit to make it legal.
With a dollar down, you the buyer don’t worry so much about losing your deposit buying a house in Maine. The more you place in escrow in a real estate broker or attorney’s trust account, the greater the faith in you the seller has that your intentions are real to buy his house.
Even in a cash sale, there is a time factor spelled out in the purchase and sale agreement to buy a Maine home.
Involving an attorney or title company assisting in the Maine real estate transfer that does their end of the puzzle. There is a clock ticking to close before a set on or before date in the house buying contract. Running out of time is one reason for a situation when I lose my deposit buying a house in Maine.
If a bank is involved six to eight weeks can be needed to produce and shuffle the paperwork for the clear to close memo to circulate to all parties.
In the Maine home sale, time to check the title, to do house property inspections, do repairs, get insurance, etc are all built into the contract to purchase the property. All the contingencies for obtaining bank financing better be spelled out to set expectation. To get up and over any house appraisal and mortgage underwriting review hurdles.
Sometimes the earnest money deposit has lots of conditions tied to it… like covering the need for the house buyer to sell another home they own first.
Many small town rural Maine real estate sales are pure cash simple. Low cost properties are easy to cash and carry. Others have lots of conditions tied to the house transfer because third party lenders are part of the home buying process.
Does the size of the deposit in a house for sale in Maine really matter?
You bet it does. If the buyer is only willing to put a dollar down in a real estate broker’s trust account, that sends a signal that they are weak, have little money. Or that they are not trying as hard as possible to cause the seller to accept their offer.
Buyers don’t lose much sleep over losing just a dollar deposit used for buying a house in Maine.
Make it five or ten thousand dollars and now sparks can fly. When attorneys get involved to help the tug of war back and forth with poison pen letters. The saber rattling if the real estate house sale fails and a battle over the earnest money deposit ensures. Mediate, don’t litigate if you can is all I can recommend and get on with life. To find another seller, a different buyer for a successful house closing.
The real estate sale is more important than the deposit forfeiture.
Focus on the goal of a sale to this or another buyer and don’t get hung up on what happens to the deposit in the house sale. Being tied up in litigation is expensive and one distraction interfering with finding the next buyer. Some contracts should not be entered into and the the odds of closing are not the best.
The purchase price offer is one very important aspect of a real estate offer being accepted or not. But the size of the deposit a home buyer is willing to plunk down to be used as liquidated damages if they do not follow through with the sale. How likely this house sale is apt to happen or not needs lots of thought and consideration before going under contract.
That promise to buy backed up with a deposit is just as important as how long the sale is going to take too. Time is money and the property off the market for other buyers to consider can be costly for a seller needing a sale.
The property coming back on the open market after being under contract makes the house buying audience think something is wrong with the property. Instead of that buyer had lots of loose ends and credit issues, etc that prevented the house sale.
As a Maine real estate broker for over 41 years, when would I rather advise a house seller not to put a property under contract for sale?
If the likelihood of it ever closing is very poor. We always look for red flags that signal problems ahead. And from past experience quickly figure out how to fix them best early on. It saves everyone heartache and time, wasting money if the house sale contract is not rushed into too hastily. Tips for first time home buyers brand new to house ownership.
The bigger the deposit on a sale that sinks like the Titanic.
It is just going to be fought over and not let go of easily. Lawyers get involved, accusations are made, court house steps and a man or woman wearing a robe get involved.
Like a tenant in possession of a home, getting them in is easy. Making them legally move quickly is not so possible. No matter how hard a home buyer needs to get in.
Five hundred, a thousand dollars is a lot of money when it is your hard earn funds being poured into the home buying dream.
But if a home buyer decides not to purchase for their own personal reasons. Due to no fault of the property inspection results or a case of house purchasing remorse. Then it is small potatoes.
I would rather not be forced with going through with a sale on a Maine home I no longer want or need.
Because I have been transferred. Served with divorce paperwork or opened up a bad medical report was dropped like a grenade into the home buying exercise arena. Or something a better fitting new home listing popped up to cause shifting gears to happen. That is when the talk of losing your deposit buying a house in Maine starts.
The longer a real estate sale lingers and delays with one after another set backs, the more unlikely the chances of making it through the operation.
Buyers and sellers lose patience. Start to wonder is this ever going to close and lose hope and faith in the sale. Life happens right on schedule. Hot buyers, sellers too cool off with time. Home buying decision making is impacted with everything else going on in a person’s life.
Real estate is emotional. Families, transfers, estates, lack of money, winter weather are all involved.
So it happens. There are times you did not see it coming. When do I lose my deposit buying a home in Maine? When the deal goes on and on and the buyer, seller, both throw in the towel.
When a title problem can not be resolved in a timely fashion, the deposit gets returned to the buyer.
If another new listing that works better comes on the market, that is a time bailing out can mean here it comes. The seller says no way, the buyer is losing his earnest money deposit because I have been tied up waiting for a closing that never happens.
Often times an out of state property buyer will ask me what do I need to send you to put a hold on the place?
How can I tie it up? Until I can clear my schedule to get up there for a looksie? What size deposit check can I write to stop the show. To send ASAP that will take the place off the market and tie it up securely?
As a Maine real estate broker, I don’t want the place off the market.
Waiting for a possible buyer that may or may not show up to do the up close and personal tour. That could change their mind between now and then and now. It locks the front, side and back door of anyone getting in. For a home buyer that already did the house showing a few weeks back. That calls and is ready to come back into the picture to buy. But can’t despite their once loose ends now all neatly squared away. “Sorry Charlie” happens if the house is under contract with a different buyer.
The home seller wants the property available to whoever is deemed ready to buy. That has the funds. Is not adding a mountain of contingencies that could hinder the home sale. Let’s dance. Not be forced to waste the music. Having to sit on the sidelines tapping your toe but not cutting the rug so to speak.
Dead of winter is not as promising a time to sell as the middle of a Maine summer too. Timing is always part of the buying and selling a house in Maine experience.
The earnest money deposit is put in place to buy time for home appraisals, property inspections, the title search.
To provide time for securing house insurance, to do repairs to obtain mortgage under-wiring. The earnest money to take a place off the market brought to the closing. Or kept, applied as a credit toward the agent or broker’s real estate commission.
The deposit does not evaporate.
It quickly gets deposited with a paper trail attached. Parked in usually a non interest bearing bank account. Unless the deposit is large. Hefty sized and designed to “hold a property” for a long period of time. Waiting for milestones to happen along the way to the closing. That the broker or agent report on as the details roll in. To keep everyone informed. (Fingers and toes crossed).
Again, the longer a sale is on the operating table though, the more apt it will not stay together to get to the closing conference room one. Just my experience.
The earnest money deposit on a home or other property placed “under contract” or “sale pending”. It can be interest bearing. But not to benefit the broker or agent that administers the real estate trust account.
Who gets the interest is spelled out clearly in the purchase and sale agreement. Also what happens to the money in the event a buyer backs out of the deal? Better be crystal clear black and white or better yet red large font.
Forfeiture of the deposit for liquidated damages for the loss of marketing time or expensive delay can be contentious. When a home buyer is on the hook for appraisal fees, bank application and title work costs. The signing off on the deposit to the seller is not always easy.
Sellers while tied up lost out on other potential house sales and were damaged. We maybe headed to small claims court if mediation does not happen for a solution. The money stays in the trust account until everything is worked out legally.
Getting signed earnest deposit releases work best.
If a home buyer is not able to purchase or just had a change of heart, often the usually nominal deposit is returned. To just move on if the property was not off the market long. The most important goal in a house sale is to successfully locate and sell to a new buyer. Not get bogged down into being tied up wrangling over what happens to the deposit from a failed sale.
When the home for sale does not appraise at or above the contract price. Or a home inspection shows issues the seller is not willing to correct to the buyer’s satisfaction. If the title is flawed and correction is not time or money economical for the seller. All these are grounds for return of the earnest money deposit to the home buyer.
The home owner who thought they could but when it came right down to it will not let the real estate sale happen and retreats.
Seller remorse happens.
Usually it is the buyer, not the home owner who gets ice cold feet. But if the seller backs out, the earnest money deposit goes back to the buyer. The buyer will not lose their deposit in cases the house seller yanked the cord. And hopefully the seller is not sued for specific performance for backing out. To legally force them to honor the contract and go on with the real estate house sale.
Have a trained Maine real estate lawyer review any paperwork before signing it.
Get he or she involved early on. To avoid talks in the closed door conference room about what you should have done but did not in the legalese you agreed to in writing.
People ask how big an earnest money deposit on a house for sale should be.
Lots of factors swirl around this one. If the market is hot for waterfront cottages like the one the buyer is eye-balling, better plan on as large as you can afford waterfront buyers. Especially if more than one anxious, aggressive buyer is after the real estate parked next to H2O.
In any real estate sale, the seller when there is more than one or a lone wolf. They will select the buyer with the best terms and conditions. So make it a short list on any contingencies and the price, the deposit as attractive as possible. The deposit if large sends a signal to the seller this buyer is not pussy footing around and means business. He or she plans whole heatedly to own this property and make it their own thank you very much.
In markets where a house in rural Maine can sell for $20,000, $30,000 a one percent deposit can seem small.
The Size Of The Deposit On Maine Property. Depends Where The House Or Listing Is Located Really. 
But in a more affluent part of Maine around Kennebunkport, Falmouth Foreside, Mt Desert Island or Ogunquit. Well the deposit is larger. That one to ten percent of the purchase price put down as earnest money. It could be a hefty chunk of change to say good bye to in a forfeiture when time runs out. When sellers or buyers move on and everything did not come together as planned.
They say the ability to save a down payment on a house is a lost art.
Blamed on instant gratification and poor impulse control. I was taught you can not have everything going and money in the bank too. The days of you keep renting an apartment until you have quarter of a home purchase price squirreled away. Those is not the only bank mortgage lending flavor. No or low down payment home loans rule the day. But pickier underwriting rules and regulations to work around these days. That is what is the price of the lack of funds saved up for property buying.
Was the offer relayed? Did the deposit ever get made and to whom? Ouch.
Quite a charge. In the event of a co broker real estate sale where there are buying and selling agents/brokers involved, who is going to hold it? Within five days or less, the money on it’s way by Fed EX. Or delivered by the USPS carrier or hand delivered, maybe wired. It will be showing up for consideration to tuck away safe and sound into the trust account. All that is addressed in the purchase and sale agreement contract language right? Right? It better be.
No consideration, no funds, no real estate contract.
Earnest deposits $10,000 and over add a new wrinkle for the trust account deposit holders and lenders. Was the money from a terrorist or drug related endeavor and in a large paper bag of unmarked tens and twenties? Cash can send the bank with the trust account into orbit of regulations to comply with to stay in business.
Before taking a deposit, prior to generating a purchase and sale home sale agreement, is the buyer even approved for lending on a house?
For a loan on one like this the seller wants to let go off? Can the buyer afford a home in this price range? Keep your deposit and put the time into learning the answers to those secrets. No one enjoys losing a deposit buying a house in Maine. Before writing the house deposit earnest money check, you better know you can pull off the real estate sale.
Pre-approval paperwork is important to make sure credit score, debt ratios and mortgage underwriting lending looks possible.
To make sure the check boxes are ticked off one by one. Before getting everyone hot to trot to sign on the dotted line that ties up the property listing. That commits the buyer to buy this house and belly up to the bar to satisfy the terms of the contract.
What are reasons to not forfeit your deposit on a house for sale in Maine?
The place did not appraise for enough. Or the mortgage loan program you qualify for does not fit the house you want to buy. You get your deposit back if the seller contracts a case of the remorse blues. For the event the property owner backs out of the home sale commitment. Not the buyer being the reason for losing the home deposit when starting out buying a house for sale in Maine?
If you had to sell your old home before buying the new one.
When that domino two step just does not happen in time. Then the deposit contingency usually provides for return of the earnest money to the buyer. Unless the option to purchase one while selling the other was tied together with a non-refundable deposit option.
An option to purchase buys time like money put in a parking meter. Long time, more money needed and sometimes the seller just does not care. Other instances they are in a major hurry when a life clock is ticking loudly. Those are the high motivation to sell situations. Times when no one needs to explain why the property is wearing such a red hot fire sale sticker.
The Dreams Somehow Involve Real Estate. Life Is About Too Big, Too Small, Just Right Sizes Property Listings. 
If the buyer for a home plans to pay cash, look Mom no bank. Coming out free and clear with no house mortgage.
Then the size of the deposit. The lack of delay going through bank financing hurdles. It makes the size of the deposit less an issue in a cash home sale.
More tips on getting a mortgage on a house in Maine.
Time is money. And if the property is not being tied up for long. When the property is top shelf just like the squeaky clean title, everyone gets to the real estate quick and easy.
Home inspection gone bad. Check please.
For it over. Give it back. That can mean give the buyer gets the deposit red rover red rover sent back over. What if the new home builder does not get the house completed on time. Or gets bogged down in foreclosure, nasty divorce, poor health or all the above. You get the deposit back. On the home to be built that was not for what ever the reason causing the stall in completion on time.
Land for a house to be constructed and stick built or a modular slid on to it.
It means permits, zoning variances, waiting on lots of layers of players. The well driller, septic system installer, the electrician, plumber, carpenter, mason. Lots of folks involved building a house in Maine.
Maybe the take your time DIY is the approach speed you are lucky to pick. But if the land has title issues with heirs that did not sign off in say an estate sale. Or there is a right of way, other easements not disclosed or known. Then deposit money returns to the house buyer cut and dry. Unless the issue can be cleaned up adequately and in a timely fashion.
A deposit fought over when both home buyer and seller can not agree on what happens to it.
That deposit can tie up the property and keep everyone hooked together with barbed wire. Get the buyer out of the picture if they are not going to purchase for whatever reason.
Here’s your deposit, it did not work out. When there is no way to make everyone happy. Make it possible to entertain other home buyers in the house hunt. Get that deposit off the books and returned so the sale music for dancing can begin again.
A big part of our Maine real estate job is just telling the audience how the process works.
What to expect when real estate is involved and the steps one by one all along the way. I have done this daily for four decades. You don’t do it quite as often or maybe over a long a period of time. I get it. I won’t forget.
Putting a deposit on a house, when do you lose it buying a home in Maine?
This blog post hopefully helps you know what an earnest money deposit is for buying a home. When it is lost, given back, split when the real estate house sale just does not happen. You thinking of being in that dream of home ownership? Know what to expect. Whether buying or selling a home in Maine, MOOERS REALTY is here to help make the process smooth, fun, less expensive time and money wise.
I’ m Maine REALTOR Andrew F Mooers, ME Real Estate Broker
207.532.6573 | info@mooersrealty.com |
MOOERS REALTY 69 North ST Houlton ME 04730 USA
