Earnest Money Forfeit Calculator

If a buyer walks outside contract contingencies, earnest money is usually forfeit to the seller. But escrow disputes, partial recovery, or state-specific rules can complicate. This calculator sizes the risk and recovery options.

Earnest money

Contract stage

Reason for walk

Expected earnest recovery

$250

Likely loss (buyer side)

$4,750

Recovery probability %

How the math works

$5K earnest money, post-contingency, buyer changed mind: recovery 5% = $250. Lost $4,750 as a penalty. Real-world: buyer typically negotiates ~$1K-$2K as goodwill; full loss rare unless contentious.

Keep earnest money low (1-2% of price) and structure contingencies to align with your real diligence window. The math says $500-$1,500 earnest is usually enough to signal intent without exposing major loss.

How to Use

Enter earnest money amount and current contract stage.
Identify why the buyer might walk (contingency vs not).
See recovery likelihood.

Frequently Asked Questions

When does buyer lose earnest money?

Walking after contingencies expire without a legitimate reason. Before inspection/financing contingencies end, earnest is usually refundable. After — forfeit unless seller agrees otherwise.

What if seller walks?

Seller refund + possible damages. Earnest is buyer-protecting in most states. If seller breaches, buyer gets refund plus can sue for specific performance.

Who decides in a dispute?

Escrow company holds funds until both sides agree or court rules. Small claims for earnest disputes under $10K-$15K (state-dependent). Larger: civil court. Takes 3-12 months.