What should a listing firm do regarding earnest money if a buyer fails to apply for financing as required in the offer?

A listing firm should hold the earnest money until the issue is resolved when a buyer fails to apply for financing as required in the offer. This approach is prudent because it allows time for clarification and negotiation regarding the buyer's obligations under the purchase agreement. The earnest money serves as a form of security for the seller, ensuring that the buyer is serious about their offer.

If the buyer does not apply for financing as stipulated, the firm can investigate the situation further, allowing the buyer an opportunity to address the requirements or withdraw if needed. Holding the earnest money also helps protect the interests of both parties, as it avoids premature disbursement which could lead to unnecessary disputes.

Returning the earnest money immediately or disbursing it outright to the seller without resolving any underlying issues could result in complications, including potential loss of the buyer's investment or claims of unfair handling. Donating the earnest money to charity is not a standard or appropriate resolution in real estate transactions as it does not respect the contractual agreements in place. Thus, holding the earnest money provides a balanced and responsible approach in this scenario.