Am I entitled to the earnest money deposit if the sale of my house doesn’t go through?

UPDATED: Sep 30, 2022

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Am I entitled to the earnest money deposit if the sale of my house doesn’t go through?

I am selling my home. The buyers have put down a $1,000 earnest money deposit. They had an appraisal and the appraisal came back at $,2000 less than the sale price. The sale price is $199,000 and we pay $4000 in concessions. The house appraised at $197,000. We offered to lower the price to $197,000 so they could get their loan and offered $2000 in concessions. They countered with $197,000 with $3000 in concessions. We have bent numerous times for this buyer and do not want to accept this offer. After reviewing our purchase contract, I do not see any contingency that would allow them to back out of the deal due to appraisal or financial reasons. Besides, we are willing to lower the sale price of the home to meet the appraisal price. Are we entitled to the earnest money deposit if this deal doesn’t go through?

Asked on April 21, 2016 under Real Estate Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

d on what you write, you would be entitled to the earnest money deposit. Earnest money must only be returned if--
1) The reason the sale doesn't go through is the fault of the sellers (for example: the sellers decide to re-list the house for a higher price, or sell to someone who offered more); or
2) there was a contingency in the contract, pursuant to which, under circumstances like the ones existing, the buyer is entitled to the money back.
But that's not the situation you describe: you describe a situation where there is no contingency and it is the action of a 3rd-party not under your control (the appaiser and/or bank) which would prevent the sale from going through. Therefore, you should be able to keep the money.

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