You put in an offer to buy a home, but now you do not want to go through with it anymore. If you cancel the sale, will you lose the earnest money, or do you get it back?
It really depends on why you canceled the sale and when you did it. Typically, you have a set of contingencies that have to be met. If they are not met, you can then get the money back and step away from the purchase without any issues.
Contingencies may include:
- Getting approved for the mortgage
- The home passing an inspection
- Getting an appraisal of the home
These are just a few examples, but they are basically just conditions that you both agree to in advance.
For instance, the homeowner may tell you that the house is in great shape and needs no work. You make your offer based on that information. You think you know exactly what you're buying.
During the inspection, though, you find out that the roof actually sustained a fair amount of damage over the years. It leaks in multiple places. The inspector tells you that you probably have to put a new roof on the entire house. This new information certainly changes the value of the property, so you can back out if you would like.
There are other ways to get out of an offer without penalty, but this is one of the most common. It pays to know exactly how this legal process works so that you never agree to anything that you will later believe was a mistake.