Q: When a mortgage loan is not approved, who is entitled to buyer's earnest deposit, seller, seller's realtor, or buyer?
I would like to consult you on a real estate matter, and find out whether you are willing to assist me in this case which you may consider to be too trivial.
We were going to purchase a property which was not listed in MLS, but was offered to us at $145K via a seller's realtor, and the contract was executed on 4/5/17 (we did not know at the time that the realtor made several misrepresentations to induce us into this transaction). We paid an earnest deposit of $1,450. We were not aware that, on 5/4/17, it was listed by realtor in MLS at $160K as "pending". While we proceeded to get a mortgage loan approval, the appraisal came back at $138K. We informed the realtor that our loan application was denied, and asked for our earnest deposit money back. The realtor proposed that we sign a contract release, and split the earnest deposit money among Seller, Realtor, and us. We disagree.
A: That will depend exclusively on what the language in the contract that you executed recites. As I have heard said time and time again, one doesn't require an attorney until you require an attorney.
A: Depends on what the contract states. You need to have a lawyer look at the contract. Typically the buyer will get his earnest money deposit back but the contract could say otherwise.
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