Why some builders let your earnest money ‘go hard

Why Some Builders Let Your Earnest Money ‘Go Hard’ — What It Means for Homebuyers

When you’re buying a new construction home, one of the terms you might hear during the contract process is that your earnest money “goes hard.” If you’re new to real estate or new construction, this phrase can sound a bit intimidating. But understanding what it means can help you navigate your home purchase with confidence.

What Is Earnest Money?

Earnest money is a deposit you put down when you sign a purchase agreement to show the builder or seller that you’re serious about buying the home. It’s typically held in escrow and applied toward your down payment or closing costs once the sale is finalized.

What Does “Going Hard” Mean?

When earnest money “goes hard,” it means that the deposit becomes non-refundable after a certain point in the contract timeline. In other words, if you back out of the deal after your earnest money has gone hard, you risk losing that money.

Why Do Some Builders Let Earnest Money Go Hard?

1. Commitment and Seriousness: Builders want to ensure buyers are committed. New construction homes often have high demand, and builders want to avoid deals falling through last minute. When earnest money goes hard, it discourages buyers from backing out without a serious reason.

2. Protecting Their Investment: Builders invest significant time and resources into each home, from design to materials to labor. If a buyer backs out late in the process, it can be costly and delay the sale. Having earnest money go hard helps protect the builder’s financial interests.

3. Streamlining the Process: When earnest money goes hard, it can speed up the transaction. Builders can move forward confidently with construction or customization knowing the buyer is locked in.

What Should Buyers Know?

• Review Your Contract Carefully: The timeline for when earnest money goes hard varies. It might be immediately upon signing, after a certain number of days, or after specific contingencies are removed. Make sure you understand these terms before signing.

• Contingencies Matter: Some contracts allow you to back out without losing your earnest money if certain contingencies aren’t met, such as financing approval or home inspections. Know which contingencies apply and when they expire.

• Ask Questions: Don’t hesitate to ask your real estate agent or the builder’s sales representative to explain the earnest money terms. It’s important to feel comfortable with the financial commitment you’re making.

How Can the York Team Help?

As a Northwest native and experienced real estate professional, I’ve guided many buyers through new construction purchases. Understanding the nuances of earnest money and contract terms is key to a smooth home buying experience. If you’re considering a new build or have questions about earnest money and contracts, feel free to reach out. The York Team Real Estate is here to help you make informed decisions every step of the way.

Contact Ray York and the York Team Real Estate
📞 +1 206-800-7460
📧 ray@yorkteamrealestate.com
🌐 yorkteamrealestate.com
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Buying a home is a big step, but with the right knowledge and support, it can be an exciting and rewarding journey!