Here’s an explanation of earnest money and the role it plays in a sale.
Today I’m answering a common question: “What is earnest money?”
Earnest money is a deposit made by a homebuyer to confirm a contract when entering into a real estate transaction. Typically, it’s known as “good-faith” money. This is held by the listing agency or attorneys, and it will go into an escrow account. The money will then be credited to the buyer at closing so they can utilize the funds towards their closing costs or down payment.
"In Connecticut, both parties need to agree to release earnest money."
Buyers almost never lose their earnest money. If you’re going through an inspection and there’s a big issue, you can back out without losing your deposit. If the property doesn’t appraise and you can’t work out an agreement, you also will get your money back.
A lot of times, there's a misconception that the seller automatically gets the money if something doesn’t work out. That’s not necessarily the case here in Connecticut. In our state, both parties need to agree to release the money from the escrow to one another.
If you have questions about earnest money or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.