Earnest Money in Livingston, TN: How It Works and Who Holds It

I'm Bridget Salazar, OC Homegirl. I'm a REALTOR® with The Realty Firm and a Certified Residential Appraiser, and Livingston is my home base.

An offer gets accepted in Livingston and within a day somebody asks the buyer for an earnest money check.

Most first-time buyers have never heard the term until that moment. Then they are writing a check with a lot of zeros on it, and nobody has told them where it goes.

So here is the whole thing. What earnest money is, who ends up holding it, when it is at risk, and what happens to it if the sale does not close.

One note before I start. This is how the process works in general terms. It is not legal advice, and your contract sets the terms for your sale.

Earnest money is a deposit a buyer puts down after an offer is accepted. It says the buyer is serious enough to put cash behind the signature.

Here is the part that calms most people down. It is not a payment to the seller. It is not a fee. It is your money, parked with a third party until closing.

At the closing table it gets credited back to you. It goes toward your down payment and your closing costs, so the amount you bring to closing is lower by exactly that much.

It is also not the same thing as your down payment, and it is not an option fee. Those are three separate items and people mix them up constantly.

Think of it as a seat deposit. The seller takes the home off the market and stops working other buyers. The deposit is part of what makes that worth doing.

The money does not sit in the seller's bank account, and it does not sit in yours.

A third party holds it in an escrow or trust account until the sale closes or the contract ends. Who that third party is gets written into the contract. It might be a brokerage, a title company, or a closing attorney.

Find that line and read it before you write the check. Then confirm three things:

• Who the check is made out to, exactly as written.
• Where it gets delivered, and by what deadline.
• What proof you get back that it was received and deposited.

Keep that receipt. Money in a trust account is tracked, and you want your own paper trail too.

One more thing, and it matters more than anything else in this section. Never wire money because an email told you to. Wire fraud in real estate is real. Call the office at a number you already had and confirm the instructions out loud.

There is no fixed figure. The amount is a term of the offer, the same as the price and the closing date.

What it does is signal. A seller looking at two offers reads the deposit as a measure of how committed each buyer is. A stronger deposit can make a slightly lower offer look better.

I work that number out with a buyer case by case. It depends on how competitive the situation is, what else is in the offer, and what the buyer can put up without draining the cash they need at closing.

That last part gets missed. Your deposit comes out of the same pile of money as your down payment and your closing costs. Writing a big check now does not create more money later. How that math works for somebody buying their first home is on first-time buyers.

This is the question underneath the question. Can I lose it?

The answer lives in your contingencies. A contingency is a condition written into the contract that gives a buyer a defined way out for a specific reason.

Common ones cover the inspection, the appraisal, the loan, and clear title. While a contingency is still open and you do what it requires, you have a path.

The risk goes up as those conditions get satisfied or expire. Backing out for a reason the contract does not cover is a different situation. So is missing a deadline and then trying to use the contingency it belonged to.

Deadlines are the part people underestimate. Put every date on a calendar the day you go under contract. My how I help buyers page lays out the order it all happens in.

Then there is the version where a deal ends and both sides want the deposit. The holder cannot hand it to whoever calls first. Releasing escrowed money generally takes written instructions that both sides sign. No signatures, no release.

When that stalls, it stops being a real estate question and becomes a legal one. That is a conversation with your attorney, not with me and not with the other agent.

What I can do is keep it from getting there. Most of these fights trace back to a deadline that slipped or a termination that was never put in writing. Written, dated, and delivered on time prevents nearly all of it.

A lot of what sells around here is a house on acreage, with a well, a septic system and a building or two out back. More things to check means more moving parts between contract and closing.

That is where a buyer's deposit stays exposed the longest. Inspection work takes longer. A water test or a septic inspection has to be scheduled. The appraisal lands on a property with few close comparable sales, which is its own kind of delay.

None of that is a reason to skip the steps. It is a reason to start them on day one. How I measure value across Overton County is on my home value page.

Sellers, the other side of this is yours. A deposit is not a loan approval. The size of the check tells you nothing about whether the buyer's financing will hold up. Ask for the lender's letter, and have your agent call that lender. Selling your home in Livingston and how I sell a home both go further into reading an offer.

Call me before you do, even if I'm not your agent.

I will read the earnest money section of your contract with you, tell you who is holding the money and by when, and walk your contingency dates so you know which days matter. That takes a few minutes.

Questions about what your contract requires go to your attorney. Questions about your loan go to your lender. The contract sets the terms, and I will not pretend otherwise.

Send me a message or call (931) 510-1346. I answer every question.