If you add money to section, 8.3(b)(i) of the REPC is it non-refundable after due diligence or upon acceptance? What happens if the appraisal comes in low and the buyer wants to cancel?
The Blank dollar amount section in this section is for a Buyer to “Sweeten” the offer by making a certain amount of the Earnest Money “Non Refundable” after Due Diligence but before Financing and Appraisal deadline. Buyers can add a partial amount of the EM here so the Seller will receive this money should the Buyer cancel, without the requirement of further written authorization from Buyer. This is a way for a Buyer to strengthen the offer without increasing the Purchase Price.
The money put forth in this section is non-refundable after the due diligence deadline. There are no provisions if the appraisal comes in low to get that portion back to the buyers. If there is a concern that the home may not appraise, an addendum can be written to address this and specify that if this happens, the money in 8.3(b)(i) will also be returned to the buyer.
(i) Buyer’s Right to Cancel Before the Financing & Appraisal Deadline. If Buyer, in Buyer’s sole discretion, is not satisfied with the terms and conditions of the Loan, Buyer may, after the Due Diligence Deadline referenced in Section 24(b), if applicable, cancel the REPC by providing written notice to Seller no later than the Financing & Appraisal Deadline referenced in Section 24(c); whereupon $______ of Buyer’s Earnest Money Deposit shall be released to Seller without the requirement of further written authorization from Buyer, and the remainder of Buyer’s Earnest Money Deposit shall be released to Buyer without further written authorization from Seller.