Listing your home is the exciting part. Finding out the deal you thought you had just fell through is the part nobody prepares for. It can happen when a buyer's financing falls apart, when an appraisal or inspection pushes back, or when a buyer simply changes their mind after the protection windows close. Whatever the cause, the first few days after a contract wobbles set the tone for everything that follows, and most of what you should do depends on one question: is this buyer exiting with a refund under a contingency, or are they in default?
First tell the two situations apart
A buyer who walks away inside a written contingency is usually following the contract, not breaking it. A financing contingency lets them cancel with a deposit refund if they cannot secure a loan within the deadline. An inspection or appraisal clause works the same way. If the buyer acts inside that window and in good faith, the contract is off and the money comes back. That is a slower outcome, but it is the outcome the buyer bargained for.
Default is a different thing. It is what happens when a buyer walks away without a valid, timely contingency. They miss a deadline, they cannot get financing and never asked for one, or they simply back out after the windows closed. The contract still stands, and now the seller decides what to do with the breach. This distinction matters more than the price, because it decides whether you are dealing with a clean release or a dispute.
Read your purchase agreement for both sets of dates before you react. The contingency deadlines, the default language and the earnest money clause are all in the document you already signed, and they tell you which situation you are actually in.
Where the earnest money goes next
In Michigan the buyer's deposit is usually held by the title company, an escrow agent or a broker's trust account, not by either party. That means nobody can just keep it on a whim. The contract controls the release.
Many Michigan contracts include a liquidated damages provision. If the buyer defaults, the agreement typically says the earnest money is the seller's remedy and it is released to the seller. That is a clean, fast path, and it is why so many deals resolve on paper rather than in court. But the clause is only as strong as its wording, and not every contract includes one, or includes it with enough detail.
If there is no clear default clause, or the buyer disputes that they are in default, the earnest money usually stays in escrow while the parties figure it out. A short, documented exchange and a neutral look at the contract dates is often enough to move it. When the positions truly conflict, a real estate attorney can sort out what the contract actually requires before anyone spends money.
Your realistic options once the deal is off
You do not have to accept one outcome, and you do not have to pick the most aggressive one. Here is how the choices usually land.
Releasing the buyer and relisting is the most common path. The contract ends, the money is handled per the agreement, and the home goes back on the market. This is the fastest way to keep the sale moving, and it is the right call when the property is otherwise in good shape and the market is still active.
Pursuing damages is the option for when the walkaway cost you real money. In theory a seller can recover the difference between the contract price and what the home later sells for, plus certain out of pocket costs. In practice this only makes sense when the gap is meaningful, because it takes time and it adds legal fees.
Specific performance is the rarest move. It is a request that the buyer be forced to complete the purchase. Sellers almost never pursue it, because a court is unlikely to order someone to buy a home against their will.
Most of the time the sensible answer is a mix: hold the buyer to the contract, collect whatever the default clause gives you, and get the home back on the market quickly.
How long it takes and what it does to the property
A clean contingency exit can wrap in a day or two. A disputed default can take weeks, and the property sits in the middle of it. During that time the listing is usually off the market, or it carries a notice that the sale is pending and uncertain, and showings may pause.
Keep the house ready while you wait. Hold off on any big decision that assumes the sale is dead, but do not let the property slide, either. Utilities, security and basic upkeep should stay in place. If the contract allows it, you may be able to quietly re market or line up a backup buyer, but talk to your agent before you do, because some contract language restricts that during a pending period.
The single biggest practical risk is timing. Every day the home sits off the market is a day it is out of the pool of active listings. The goal of this whole process is to shorten that window, not to win an argument about it.
Protect yourself at the contract stage
The best defense against a bad outcome happens before you accept an offer. When you review the purchase agreement, pay attention to the buyer's contingencies, their deadlines, and the default and earnest money clauses. A financing contingency with a short, firm deadline is easier to live with than a long, open one. A clear liquidated damages provision is worth more than the deposit amount itself.
If you are selling into an uncertain season, or if the buyer is relying on the sale of another property, ask your agent to explain each deadline in plain terms and to make sure the contract says what it should say. A contract that is vague about default is a contract that invites a dispute later. The ten minutes you spend on it before acceptance are the cheapest insurance you will buy all year.
What to do in the next 48 hours
Do not make the big call in the heat of the moment. Start with the contract and its dates, get your agent involved, and confirm where the deposit is sitting and who is holding it. If a default looks likely and the stakes are real, bring in a real estate attorney early, not after the money has already moved.
Most of all, keep the goal in view: you want to sell your home, not finish a legal case. A clear, calm, documented response usually gets you there faster than any escalation, and it keeps the property and the people involved out of a fight that costs everyone.
This article provides general real estate information, not legal advice. Contract terms, contingency deadlines and default remedies vary by transaction, and a real estate attorney can tell you what a specific purchase agreement requires. Confirm the details of your contract with your agent and an attorney before you act.
If you are a West Michigan seller and a deal has wobbled, call or text me at (616) 856-1492. I will walk through your contract dates with you, explain what your realistic options are, and help you get the home back on the market without losing more time than you have to.
Rennie Barton
REALTOR® and broker/owner, City2Shore Arete Collection. Questions about this post? Call or text (616) 856-1492.