Good faith payment?

Question

My husband and I recently bought a house. (well, we close on it on the 31st) The realtor asked us for a "good faith payment." Do we get this back? If so when?

Answer 1

Your good faith deposit generally goes towards the purchase price of the house so it is not refundable as long as you go through with the purchase. If the sale should not go through than you may (or may not) be entitled to a refund. This depends on who cancels the contract and why.

Check your contract....if you are paying $200,000 for the house and you put down a good faith deposit of $5,000 then you should be financing something less than $195,000.

Hope this helps you.

Answer 2

If everything goes through normally, the "good faith payment" kept in escrow and is used as part of your closing costs, so it's less cash you have to have on hand then since you've already paid it. You pay it to show "good faith", i.e. you're serious enough about buying the house that you agree the seller gets to keep it if you break your end of the contract.

The exact cases where you get it back (for seller's default) or lose it (for your default) should be spelled out in a contract that you've seen. If not, your realtor should be able to show it to you and explain the terms. Buying a house involves alot of money; it isn't at all unreasonable to stop and ask "now what is this I'm signing?" or "What is this money going toward?", etc. Don't worry about whether you're annoying the realtor, lender, etc. by asking questions.

Answer 3

You need to read what the contract of purchase provides regarding return of the deposit, as well as any agreement you may have with your broker.

Typically the buyer would be entitled to the deposit back if the sale doesn't close because of the seller's breach or the seller's inability to deliver marketable title. If the sale doesn't close because of your breach you typically forfeit the deposit.

Also if you have a broker, check and see what your agreement with him says regarding the deposit.