Earnest Money Deposit

An Earnest Money Deposit (EMD) is a sum of money a buyer puts down when making an offer to purchase a property. This deposit shows the seller that the buyer is serious and committed to the transaction. Typically, the EMD is held in an escrow account and is applied towards the buyer's down payment or closing costs if the sale goes through. If the deal falls apart due to reasons outlined in the contract, the buyer may recover their deposit. However, if the buyer backs out without valid reasons, the seller might keep the deposit as compensation for the inconvenience.