This weeks most asked question, “What is a earnest money deposit”? Also referred to as EMD …
Most offers are accompanied with this type of check, the reason for the deposit is to let the seller know that the buyer intends to purchase the property.
When the buyer and seller agree to terms the EMD is placed into a escrow account with either the listing office, buyer office or the title company. At closing the funds are applied to down payment and closing costs.
If the transaction does not close, both parties should negotiate a fair solution to the return of the EMD amount. If a fair solution cannot be reached between the buyer and seller, then legal action may be necessary to determine if the buyer gets the EMD back or does the seller keep the EMD deposit.