In many states, buyers put up earnest money when they agree to purchase a home. In Louisiana, there is no earnest money – instead, we have a deposit. And many buyers don’t realize that they can put their deposit at risk of being automatically forfeited to the seller if they don’t follow the terms of the contract.
There are plenty of buyer protections and outs built into a New Orleans home purchase agreement, but there always seem to be some buyers that don’t quite get that they have entered into a binding contract once an offer has been negotiated.
How to lose your deposit when buying a home
You get cold feet after your inspection and due diligence period
We’ve seen folks go through the entire inspection period, negotiate repairs, agree to move forward with the sale and then….cold feet. Buyer’s remorse. Second thoughts. Whatever you want to call it, there is no term in the contract that allows you to just say “I changed my mind”.
You don’t have any contract contingencies
I’ve seen buyers that get so excited about a house that they make an offer with absolutely no contingencies. No inspection or due diligence period, no appraisal requirement, no financing condition, no nothing. The problem with writing an offer like this is that you have just given away your ability to cancel the purchase agreement for any reason.
Missed deadlines in the contract
While contingencies are designed to protect you when buying, they typically come with deadlines. If you ask for a 15 day inspection period and then come back on day 16 and ask for repairs, guess what? Unless the seller takes pity on you, you are out of luck.
What does the contract say about deposits?
The Louisiana purchase agreement states that the deposit shall be returned to the buyer IF:
- The contract is declared null and void during the inspection/due diligence period
- There is a financing contingency and the buyer cannot obtain a loan after making good faith efforts
- The buyer conditions the sale price on an appraisal, the appraisal is less than the sale price and the seller will not reduce the sales price
- The buyer terminates after review of any leases or assessments
We do everything in our power to protect you as our client, but it’s up to you to be sure that you understand the terms of the contract before you sign it. ASK QUESTIONS of your agent and don’t sign anything until you are sure you know the answers.