Q: My agent informed me that earnest money for a short sale transaction was required to make a contract binding. Is that true? More importantly, is earnest money refundable if a buyer pulls out of a contract prior to bank approval even though our contract provides for bank approval within 60 days?
–Anonymous, Bartlett, IL
A: The promise of the earnest money deposit is needed, but the money does not have to be placed into escrow until the bank approves the sale. This is a common error.
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