What is Earnest Money?
It’s a deposit a prospective homebuyer makes as evidence of good-faith intention to complete the purchase, and it’s generally submitted once all parties ratify the contract. You may see it abbreviated to EMD (earnest money deposit).
The amount of the earnest money is negotiable between the buyer and seller, and it's typically held by the title company or the buyer’s broker in an escrow account until the home sale closes.
At closing, the earnest money goes toward the down payment or the buyer’s closing costs. If the sale falls through, the deposit is either returned to the buyer or given to the seller, depending on how the purchase agreement is written.
Have a real estate question? We'd love to help you find the answer!