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Earnest Money

  • As with any real estate contract, the earnest money on a short sale is due according to the terms ofthe written agreement.
  • Earnest money should be deposited as required by state license law based on the date the contract was signed by the buyer and seller-- not based on when the contract is approval by the lender.
  • If the buyer does not want the earnest money deposited before the lender has approved the contract, the buyer's representative should note that on the contract.
  • Listing brokers are wary of accepting personal checks for earnest money too close to the closing date. Many lenders do not allow more than ten days to two weeks for closing after they have approved the short sale. If the check does not clear, there could be problems.
  • Without sufficient earnest money, a buyer may not hesitate to wal away from the transaction. The greater the amount of the earnest money, the greater the chance of the buyer being committed to the contract.