Earnest Money Deposit

When you make an offer on a home, you will need to put down an Earnest Money Deposit, also known as an EMD.  Think of this as your good faith money. It shows the seller that you are seriously interested in their home.

The amount of the deposit is typically 1% of the sales price. So, a $400,000 house means that you would write a check for $4,000 as soon as the contract is signed by all parties (ratified).  This money is then put into an escrow account held by the Title Company and will then be applied to your closing costs.

Be aware that this money has to be delivered to the Title within three to five days after you are under contract, so make sure you have the funds in an account you can easily access.

You can always put down a higher  earnest money deposit, but just know that if you have to void the contract for any reason that is not protected by a contingency, the seller could get to keep that money.  For more information about contract contingencies, click here: Contract Contingencies

Your agent will advise you on the earnest money in relation to your specific offer, but just make sure you understand the purpose of this money and how it relates to your offer and closing costs.

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