You finally found the home of your dreams and you decide to write an offer. Your real estate agent drafts the paperwork and tells you to remember your checkbook for the EMD. Don’t panic if you aren’t sure what that means, just ask your agent for clarification.
An EMD, also called Earnest Money Deposit or Escrow, is the money a buyer puts down to demonstrate that an offer to purchase property has been made in good faith. Usually, the earnest money is due when the contract is signed and an agreement has been reached by all parties, but sometimes it is collected at the time an offer is made. Once deposited, the funds are held in an escrow account until closing, when they are then typically applied towards the purchaser’s down payment and/or closing costs.
The purchase agreement or sales contract will detail the amount, when the deposit is due and who will be holding the funds, known as the Escrow Agent. While the amount of the EMD is negotiable, it often ranges between 1 to 2% of the purchase price, but can be as low as $10 and is often $100, $500 or $1000. Your agent will guide you on the best strategy for your particular situation and market.
If you are thinking of making a move, talk to a Colony Realty agent today.
To learn more about Earnest Money Deposits, check out the articles below: