When a Buyer submits an offer to a Seller, it most often contains an Earnest Money payment. This payment shows good faith that the Buyer is serious. The higher the amount, the stronger the offer. The money is held in an escrow account and held until the transaction is completed, usually at closing. At closing it is a credit for the Buyer applied toward the purchase. If the Buyer defaults on the contract, the earnest money can be claimed by the Seller for damages suffered from taking the home off the market.
The Buyer may take back the Earnest Money if the contract allows them to under stipulations such as during the due diligence period, when the Buyer terminates agreement due to change of mind or any other reason. Another way the Buyer can get back the Earnest Money is if they have a Financing Contingency period and they get declined by the Lender and provide that decline letter before the contingency period ends. It is important to follow time limits of contingencies and due diligence periods, for if they expire, it is too late to cancel and get the Earnest Money back. If the Buyer does not extend these periods and then tries to cancel outside of period, the buyer is in default and may not get the earnest money back. The Seller then may obtain it. The Buyer also gets the earnest money back if the Seller defaults.