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Can a seller keep a buyer’s earnest money?
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Joe answers questions he received from clients. Feel free to submit your own question.
Email us: joeholmes@kw.com
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Great question and many tangents would be needed to really do this justice. The short answer is that it is certainly possible. Earnest money funds are typically non-refundable after all the buyer’s offer contingencies are satisfied. If the buyer doesn’t close per the offer terms, it’s possible they’re in breach and could lose their earnest funds. However, in MN in order to cancel a purchase agreement, both parties need to sign the cancellation document. Within that document it states where the earnest money goes. So if it’s supposed to go to the seller but the buyer refuses to sign, you have potential for issues. There’s a statutory process that would need to play out and that can take months. So in the end, even though the seller may have the right to do so, actually getting the funds may be difficult. See what I mean.. tangents can fly on this question!
How long will this current real estate market frenzy last? Well this is certainly the # 1 question we get as realtors and dedicated 4 pages of this magazine on the topic. Nobody knows for certain but the factors to watch are still the basics.. supply vs. demand. I think the market imbalance will ease up a bit in 2022 and we’ll see appreciation slowing down and to normal levels. I think it’ll take 2-3 years to start to see inventory counts up around more balanced levels. Remember that it’s still a crazy huge seller’s market if it takes 30-60 days to sell a home. That’s still a HUGE seller’s market but think of how strange that will feel when we get there.
