Juggling Jinxes of Contingency and the Hide-and-Seek Saga of Earnest Money
Hey there, future homeowners, savvy investors, sophisticated sellers, and everyone who just happened to stroll into the intricate world of real estate! Today we’re cracking open the piggy bank to discuss a topic heavy on everyone’s wallet – the Earnest Money Deposit (EMD). Buckle up because the ride through contingency road can be a bit bumpy!
Published October 10, 2023
When you dive straight first into the real estate pool, you’ll come across EMD, an impressive-sounding term that is as vital as the roof on your future home. Imagine it as the first stamp in your “Serious Buyer Passport”. A juicy EMD not only winks at sellers that you’re not here to play games, but also says, “Hey, I’ve got some financial skin in this four-walled game!”
But what about the sellers? You’re not being left out of this party. Think of EMD as a cushy safety net that ensures the buyer performs their duties that were outlined in the offer, while your beloved home saunters off the market. Score!
Now, listen carefully because this is where things get as twisty as a mountain road. It’s contingency time, folks! Most Residential Purchase Agreements are peppered with contingencies. These are your special secret codes that may allow you to tiptoe out of a deal without leaving your EMD behind, like your best scarf at a house party.
You’ve placed an offer only to find out that the home inspection revealed the house is seconds away from collapsing; or you’ve studied the Common Interest Community documents and you’d probably have more fun at a dentist than commit to those rules. Maybe the financial gods weren’t smiling this month, and your loan didn’t get the stamp of approval. Life happens, and these alluring contingencies are here to help!
Contingency scenarios are your “escape clauses.” They’re like the secret doors in those grand old mansions (or, if you prefer, they’re the “Get Out Of Jail Free” card in Monopoly). For example, suppose, after tiptoeing through the house during inspection, you spot foundations as solid as a marshmallow soufflé. In that case, the inspection contingency is there to rescue you and your precious EMD.
The same applies to common interest community (aka homeowners’ association or HOA) documents. Like a surprise plot twist, those pesky regulations can jump out, and you may prefer to bail rather than roll with that particular punch.
The plot thickens even further with those valuable, yet often elusive, appraisal and financing contingencies. Real estate, much like sipping a perfect cup of coffee, runs on calculated decisions, and these two contingencies are the spoon to stir the brew.
Finally, and this deserves all capital letters because of its importance: ALL CONTINGENCIES ARE NEGOTIABLE. That’s right, folks, everything from A to Z, from inspection timelines to your neighbor-to-be’s affinity for polka music, can be discussed and negotiated during your home buying journey.
But beware, and I can’t emphasize this enough – timekeeping is everything here. The timeline of your contingencies isn’t a suggestion – it’s more of an ultimatum. Miss your deadlines, and your EMD could be waving goodbye with a grin and a hearty snap of its suitcase!
To keep your EMD safely tucked in your pocket, it’s all about diligence, understanding contingencies, and playing detective with documents. In the thrilling novel of buying a house, missing pieces and surprises should be left to fiction, not your reality!
Now, go forth and prosper in your property pursuits. Remember, in real estate, as in life, knowledge is indeed your superpower, and a bit of wit always helps along the way!
A professional real estate agent will keep you up to date on all of your timelines and should let you know when you get to the day of no return, stop the car before you go off the cliff. A great Realtor will save you all of those piggy bank savings. Just a cherry on top is the lender who keeps another eye on those contingencies, the Wright Team will save you thousands of dollars, the wrong team, well? Contact Us…