When problems are discovered in a real estate purchase, the buyer’s earnest money may or may not be refundable, depending on a few factors and applicable state law. First, if the real estate documents were properly negotiated, they should spell out the when the earnest money is refundable – such as with a financing contingency and the buyer was unable to obtain financing, or other contingency. Also, in many states, if the seller or broker failed to properly disclose known defects in the condition or desirability of the home as required by state law, such failure may entitle the buyer to cancel the purchase before closing and get their earnest money back. However, if the buyer simply changes his or her mind, the earnest money is usually forfeited. Make sure to read the real estate documents carefully – sometimes they explicitly state the earnest money is nonrefundable under any condition. If problems arise, seek legal counsel as there may be aspects of the contract or state law that would entitle the buyer to a refund of the earnest money not otherwise discussed here.