Earnest Money Deposit (EMD)

Updated 5 months ago ​by Aneesah Emeka

Earnest Money Deposits (EMDs)

In a nutshell: 
It's a down payment on your down payment. An EMD is the initial deposit you'll be asked to put down once a seller accepts your offer. It shows that you're serious about buying and willing to put your money where your mouth is. 

What you need to know: 

  • The standard amount for an EMD is 3% of the purchase price (ex: $15,000 on a home valued at $500,000).  
  • Offers could include a lower EMD amount, but sellers may feel uneasy about your willingness to go through with the purchase. 
  • You may have to put down more for certain probate or auction sales.

Can you get your earnest money deposit back? – Yes!
As long as you follow the schedule outlined in your offer, you can get your full initial deposit back. You can reclaim your initial deposit if certain contingencies are not met.

How might you lose your earnest money deposit?
Since your EMD is a “good faith” commitment to buying the property, you will be penalized if you back out of the purchase contract for no good reason, e.g. buyer’s remorse, cold feet, or a change of heart. In those cases, you will forfeit your earnest money deposit to the seller. If you change your mind after the offer has been accepted, your contingencies are your only way out.