I wish I could say that I’ve had one name for it. Currently it’s my contract fee. But I’ve called it several things including a non-refundable earnest deposit, which defeats the purpose…
The name is not as important I suppose as the understanding that I’m not interested in tying up my property for a looky-loo, or someone with iffy financing options. I give the buyer all the time he wants, or needs, to check the place out and confirm what I’ve told him about the house BEFORE he gives me the check.
I list everything I know or can imagine are problems; termites, dry rot, foundation problems, plumbing leaks, main line clogged/broken/cracked, cracked windows, and mold, etc. etc.
I’ve included things I knew were not problems just to make sure I didn’t give the buyer an excuse to renegotiate my price, or ask for his money back.
This goes against the grain of the average seller trying to skin their buyers.
Once, I didn’t mention the main line was cracked. The buyer showed me a spot on the lawn that was all wet and spongy. Sure enough the main was cracked. He hadn’t given me a check at that point.
If he had given me a check and later found the drain problem he might have demanded his contract fee back, or renegotiated the price. However, since I insisted he do his due diligence before he committed, I was able to maintain my price, collect my check, and see if he was going to close, or not. In that case the guy closed two weeks to the day of giving me my non-refundable contract fee of $2,500 dollars.
One caveat here… I don’t necessarily ask for a non-refundable contract fee from a reliable, proven buyer.