Earnest money going "hard" after due dilligences? Is it common?

[Jean G.]

Hello,

I was trying to get a 48 unit complex (rural but stable area with just under 10% cap) under contract. There were 2 offers being considered by the seller (ours and that of another group) and we were asked for highest and best due yesterday. The broker highly suggested that we make the earnest money non refundable at some point in the process, or waive the financing contingency, but my partner in the deal (much more experienced than me) was adamantly against this, saying that we would loose all leverage in case of any misrepresentation/surprises discovered later on in the process.

I was just informed today that the seller selected the other offer, mainly because they agreed to make the earnest money non refundable at the end of a short 7 day inspection period.

I know that the story is not over till it's over, but I was wondering how common it is to make the earnest money non refundable at some point in the process (specially if your offer is financed and not cash), in a multifamily deal? Do you consider this risky if the due diligence was thorough?

Maybe Brian Burke can chime in?

Jean