A binder is an agreement between a home seller and buyer that grants the rights to purchase for a specified period of time. These rights are secured by the exchange of funds from buyer to seller, which could be lost if the buyer decides not to follow through with the purchase. These funds are referred to as earnest money. A binder may also be known as an offer, and does not have to be accepted by the seller. In order to protect their assets, those purchasing the home should ensure that the binder’s terms include conditions for a refund of exchanged money should the deal not progress. If the home purchase does not occur within the period specified in the binder, the agreement will expire. Certain conditions may be included in a written binder, including financing and property inspection contingencies.
