When you are buying a home for sale in Las Vegas, you’ll put down an earnest money deposit. Earnest money is a good faith deposit that shows the seller you are really willing to buy their home. This deposit is important, because it makes a seller willing to take their home off the market to sell it to you. If you don’t come up with an earnest money deposit, sellers may not think that you are serious about purchasing.
You don’t give your earnest money deposit directly to the seller. Instead, you give it to your real estate agent, who ensures that it is put in an escrow fund. No one is allowed to take the money until certain conditions are met.
Could You Lose Your Earnest Money Deposit?
Usually, an earnest money deposit is applied to your closing costs or your down payment on closing day. However, there are some cases in which you could lose your earnest money deposit entirely – such as when you don’t have contingencies built into your purchase contract that protect you.
Related: 5 secrets to getting higher offers for your home
What Are Contingencies?
Contingencies are conditions that must be met by either or both parties in a real estate deal. If either side doesn’t hold up their end of the bargain, the contingency is not met – and it’s usually a deal-breaker.
Related: What to do if you’re thinking of selling your home
Common Contingencies and How They Relate to Earnest Money Deposits
The following table outlines common contingencies included in real estate purchase contracts. If you encounter one of these situations without a contingency in place to protect you, you could be in danger of losing your earnest money deposit.
| Contingency | Conditions | What Happens? |
| Appraisal | If the property appraises for less than its sale price, you can renegotiate with the seller or cancel the deal with your earnest money intact. | You keep your earnest money deposit. |
| Condition | If you discover undisclosed problems with the property’s condition, you can usually walk away from the deal and keep your earnest money deposit. Usually, people discover issues during the home inspection. | You keep your earnest money deposit. |
| Financing | If you can’t get financing (but you can show that you tried), you get to cancel the deal. If you can’t prove that you tried to get financing, then you may lose your earnest money deposit. | You keep your earnest money deposit if you have proof that you couldn’t obtain financing; you forfeit it if you can’t prove that you tried and failed to get financing. |
| Title Search | If the title comes back “clouded” (meaning that there’s a lien or issues with the ownership of the property), you can walk away with your earnest money deposit. | You keep your earnest money deposit. |
| Cold Feet | If you decide you no longer want the home but you don’t have a reason (such as financing, appraisal, condition or a clouded title), you can cancel the deal – but it’ll cost you your earnest money deposit. | You lose your earnest money deposit. |
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