When you start the process of buying a home or any type of real estate, you’ll no doubt hear the term “earnest money deposit” (EMD). So what exactly is an EMD?
An EMD becomes relevant when you are ready to make an offer on a property. In most states, your Real Estate Agent prepares the offer on your behalf. The offer usually takes the form of a written contract that is submitted to the seller by way of their agent.
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In addition to the offer document, sellers typically expect an EMD. An EMD is a monetary deposit submitted via check to demonstrate to the seller that you are a serious buyer. In some regions of the country, only a photocopy of the check is submitted with the offer, and the original check is delivered to the appropriate entity if the offer is accepted. Ask your Real Estate Agent to clarify how deposits are handled in your region of the country.
The check is usually made out to an independent third- party such as a Title Company, Escrow Company, Real Estate Attorney or your Real Estate Broker. Ask your Real Estate Agent to clarify who will hold the EMD.
The amount of the EMD sellers expect varies by region. The EMD amount is based on the customs and practices for a region, but is generally from 1% to 2% of the purchase price. In a competitive market place where demand exceeds the supply of homes, some buyers may offer a higher EMD than expected to impress the seller of their intent. In determining the amount of your EMD, consult your Real Estate Agent and balance the need to demonstrate your serious intent, against the good business practice of minimizing the deposit amount.
The amount of the EMD is usually applied to reduce the purchase price of the property or to cover closing costs, as you dictate. For example, if you are purchasing a $300,000 property and you give an EMD of $3000, then the remaining balance owned at closing is $297,000 (plus closing costs). Alternatively, you may direct that the EMD be applied toward the closing costs.
Once a valid contract for purchase is created, an independent third-party usually holds the EMD until the purchase is either completed or cancelled. At this point, the money belongs jointly to both the seller and the buyer.
In cases where you make an offer that is accepted but later decide to cancel the offer, the terms specified in the contract (or state law) will dictate if, and under what circumstances, the EMD is returned to you. Be aware that you could loose your deposit if you do not not comply with the terms of your contract. Your Real Estate Agent can provide you information about how EMDs are dealt with if a contract is cancelled.
Since state law varies by region and practices can differ even within the same state, be sure to consult your Real Estate agent about the rules that apply to EMDs in your region of the country. You should also be aware that the EMD is not related to any down payment that you make toward your home loan.
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Help answer the question about real estate
November 24th, 2009 at 7:20 am
god may not be a real estate agent, but the British Empire was one.
November 24th, 2009 at 8:21 am
LOL. that was so funny, imma print screen that and make it as my d/p
November 24th, 2009 at 7:42 pm
I didn’t know sheep could type.
November 25th, 2009 at 12:35 am
Here is what I understand. If John McCain wins he will give 53% of the countries tax cuts to the same corperations that just swindeld 750 billion dollars out of tax payers. And on top of that institute a spending freeze. Which means he wont be able to invest the development of alternative energies. Which means america will continue to be at the mercy opec. And ontop of that americas infestructure will continue to crumble do to the fact it dosent get the overhaul it desperatly needs.
November 25th, 2009 at 1:40 am
Fuck Ralph Nader. The presidential election ballot is not the place for protest.
November 25th, 2009 at 2:00 am
illum503 you are a moron
the election ballot is the home of protest
November 25th, 2009 at 2:48 pm
In what way is the ballot not a platform for protest. How else is one supposed to protest?, light a candle, say a prayer, sign a online petition? The ballot is the purest form of protest afforded the American public. That is one of the most beautiful aspects of Democracy. What an asinine thing to say.
November 25th, 2009 at 3:31 pm
Do you really think that by voting for Obama you are not supporting Bush’s policies?
November 25th, 2009 at 4:55 pm
you know…its too bad the BEST MAN won’t win the presidency again… Nader has way to much integrity and has had this depth of character too long to change now.. The only candidate that isn’t a politically expedient hypocrite….I wonder how a ticket with Nader and Colin Powell (in either order) would have done????
November 25th, 2009 at 7:53 pm
If Barack Obama wins he will get us out of Iraq. That means no more wasted money on a pointless war. He will go after the real culprits of 9/11, kill those people, and then pack up operation fuck up the middle east and call it a day. He will overhaul americas infestructure, create alternative energies and put this country in such a position as to where america will never be relient on foreign oil ever again. Not to mention the fact that he will put desperately needed regulations on wall street!
November 25th, 2009 at 8:57 pm
your soooooo ghey
November 25th, 2009 at 11:07 pm
yeah like holy land of every religions right of that land, God give it to us blah blah blah
November 26th, 2009 at 12:28 am
If McCain or Obama get in, we’re screwed because the fact is that neither canidate talk about revoking the powers Bush gave himself which they will inherit. But if we can get either Ron Paul, Ralph Nader, Cinthia McKinny, Bob Barr or Chuck Baldwin in as president, we will see the return of our freedoms and a restoration of America. You don’t need to know who I’m voting for, just know I vote for the constitution and who i want to win, and not for who I think is going to win like some people.
November 26th, 2009 at 2:48 am
That is exactly why you should vote for him…The duopoly does not want you to see him because he is a threat to their control of OUR government! He is on the Ballot in 45 States and is eligible for write in in the other 5. every vote counts! Let’s prove it.
November 26th, 2009 at 6:17 am
well…it kind of isnt because protest is basically lobbying by individual citizens while voting is not trying to convince a politician of something, its choosing the politician who already shares the same train of thought. You vote for someone you dont need to protest to because if u believe in that candidate, they be on it automatically.
November 26th, 2009 at 2:57 pm
Nice Vid. I enjoyed it. We market properties and other things on youtube, we hope to create a large network of people interested in making money. Your video gets a five star rating from us. I hope you feel the same about ours.
November 26th, 2009 at 3:08 pm
becasue that’s who i’m voting for
November 26th, 2009 at 3:50 pm
Paul dropped out eons ago and is now endorsing Chuck Baldwin. Paul wants you to vote for Baldwin, so, again, why write him in?
November 26th, 2009 at 9:35 pm
And Ralph would know, since he thinks he’s God.
November 27th, 2009 at 2:15 am
We don’t see him on the news and in debates because this whole system of government is controlled, I believe that. If you got a guy like nader in office, Americans would be given back thier constitutional rights that these “elitist” want you to think you have, but you really don’t. It isn’t fair that Bob Barr and Mr. Nader aren’t able to speak at debates and such…what happened to equality? if we all woke up, we could get Nader in office.
November 27th, 2009 at 10:13 am
I wish the third partys would form a coalition.
November 27th, 2009 at 1:07 pm
And as for the 10 trillion dollars Barack plans on spending. He will be spending that money on you! All his goals of infestructure overhaul, clean coal power plants, Solar and Wind energy fields, all that creats jobs. Which means a large amount of that money will end up in your pocket. Which means Barack Obama plans on killing 2 birds with 1 stone. Alternative energy, and solving the unemployment problem. Makes sence to me!
November 27th, 2009 at 2:00 pm
And to end my argument. Barack Obamas polocies do not mirror Bushes policies at all. Bush gave lots of tax cuts to corperations in good faith that corperations will take care of america. In turn those corperations took that extra (”CHING”!) and invested it in foreign markets. Those markets TANKED! I mean (EPIC FAIL)! John McCain wants to do the same thing. Barack Obama on the other hand wants to go back to the same tax structure we had in the 90’s under Clinton. Which would help alot of america.
November 27th, 2009 at 3:27 pm
November 27th, 2009 at 5:37 pm
Please forgive all the poor spelling.