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Here's how earnest money works in Florida home purchases

When you find the perfect home that you want to buy and make an offer, you'll need to write a check to go along with it. That's called "earnest money," and it's a show of good faith to the seller that you intend to go through with the purchase.

Earnest money can be $500 to $1,000 in a slow-moving market or on a house that has been on the market a while with no offers. But a home in a competitive market in Florida could require earnest money of 2 percent to 3 percent of the amount you're offering.

So, if you're offering $500,000 for a home, the earnest money could be between $10,000 and $15,000. That substantial amount could get your offer accepted in the case of multiple offers.

And that's serious money.

When you write the check, it doesn't go to the seller. Instead, it's kept by a third party in an escrow account and eventually will be put toward your down payment when the deal closes.

But is it gone forever if you change your mind or something happens? Earnest money deposits typically are nonrefundable. There are some situations in which you can get your money back, however. They include:

The home doesn't appraise for the contracted price

A lender will not fund a loan if that home you agreed to buy for $500,000 doesn't appraise for that amount. You can negotiate with the seller to reduce the price or come up with a greater down payment to reduce the amount you borrow. If neither side will budge and the bank won't lend you what you need for the home, you can get your money back.

Your loan doesn't go through

If you've included a financing contingency in your offer and don't qualify for the loan, you can get the money back. No contingency? That isn't a slam-dunk refund.

The home doesn't pass inspection

If you've made your offer contingent on a clean home inspection, you can walk away from the purchase if the seller won't fix any problems that the inspection reveals.

The seller doesn't want to sell

If you simply get cold feet, you can't back out. But what if the sellers change their mind? You will get your earnest money back.

When you put that offer on the house, it could be helpful to have an attorney who works with real estate check out the contract and also explain the earnest money conditions.

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