There’s an intangible cost that a seller pays when their house goes under contract: they have to pull the home off the market. It can take months to close on a home, and if something happens to prevent that, they’ve missed countless opportunities to bet a qualified buyer in the home. To offset this cost, most sellers will require a cash deposit (aka binder) to compensate the seller if the buyer is not able to close on a sale in a reasonable time period.
The amount of a deposit can vary. To have an offer taken seriously, a buyer should consider putting down 1%-2% of the offer price. Deposits are not paid directly to the seller but are placed in an escrow account, usually with the title company listed on the contract. The title company serves as an independent third party to the transaction and must follow strict rules laid out by the state for maintaining and disbursing the money.
Most contracts are written so that the deposit is fully refundable within a preset inspection period (15 calender days in Tallahassee). If the real estate transaction closes, the title company will credit the deposit to the buyer at closing. If the transaction doesn’t close and the contract is not terminated before the end of the inspection period, the buyer will likely lose their deposit. When there’s a dispute as to who the deposit rightfully belongs to in a failed transaction, both parties must either come to an agreement or take the matter to a court.