I came across this great article this morning on REALTOR.com. The contract protects buyers over and over again. In fact, there are 10+ ways to get your earnest money back when a transaction goes South. Earnest Money is a deposit the buyer puts down on the house that, basically, lets the seller know you are serious about this house. It is held in escrow by the title company until closing or such time that it is released. Without it, a buyer could potentially put contracts on several houses, taking them all off the market, then decide which one they want later and terminate the contracts on the other houses. This would obviously be very problematic for sellers - especially those who have a short time frame to sell!

The earnest money is then applied back to the closing costs at the time of closing. If you don't make it to closing, most scenarios will allow you to be refunded the earnest money. Unless you hit one of these three scenarios:

1. You waived the contingencies - Houston has been a very hot market lately causing it to be in favor of the seller. Lots of buyers waived the contingencies to make their contract look stronger.
2. You are outside the timeline parameters as laid out in the contract
3. You change your mind on the house - It happens sometimes. Buyers get cold feet, find a different house they love more, or circumstances just change and you aren't ready to make that purchase. If this happens though, be ready to give up the earnest money!

Having a good discussion with your REALTOR® up front about your situation, preferences, and choices is very important and can help you make the best choices for your transaction!

Here is the full article from REALTOR.com

OUCH! Here Are 3 Times When You Can Kiss Your Earnest Money Goodbye