Did you know you could lose thousands of dollars if you don’t understand how the earnest money deposit works when buying a home?
Hi, I’m Tanja Odzak, eXp Realty. I love helping people. I’m a Senior Level Realtor and I help people sell and buy homes right here in the East Bay!
If you’re a buyer thinking about buying a home, you’ve probably heard the term “earnest money
Deposit”… What exactly is it, and why is it so important? Let me break it down for you.
First off, earnest money deposit also called EMD for short. Think of your EMD as a “good
faith deposit”. It shows the seller that you’re serious about buying their home… so serious in fact, that you’re putting money on it. So, it’s your skin in the game.
When you submit an offer, you include this deposit as part of the deal. For example, if you make an offer on a home for a $1,000,000 purchase price, your good faith deposit would be $30,000 or 3% of the offered price.
Once the seller accepts your offer, your earnest money deposit is placed into and held in an escrow account until the sale closes.
But here’s the key: this deposit isn’t just free money that you get back. If everything goes smoothly, it gets applied toward your down payment or closing costs.
BUT! if you back out *without* a legit reason, like a contingency in your contract, you could lose that money! Which means- the seller could have the right to your EMD for breach of contract.
That’s why it’s important to have an experienced agent to negotiate contingencies like financing, home inspection and appraisal in your contract to protect your EMD. These contingencies help protect your deposit if something unexpected happens and you need to back out of the deal.
Also, it is always best to work with your Realtor and escrow officer to see what your best options for payment are. Most title companies will take your good faith deposit in the form of a wire transfer or cashier’s check. Cash, debit and credit cards are definitely not accepted.
If you would like more information on how to protect yourself and your deposit when buying a home, Call me today and let’s talk about it! I’m a seasoned East Bay expert with a 5-star rating. I’m Tanja and I sell homes. I’d love to help you on your exciting journey of home ownership. Let’s get you going, Call me today!
I’m a Top Producing Realtor® in the OAKLAND / BERKELEY / EAST BAY AREA. I’ve been in the San Francisco East Bay Area since I came up to do my undergrad at UC Berkeley (a long time ago!), with a short stint at UC Davis while getting my Master’s. I take my duties as a Realtor® and Fiduciary very seriously, I enjoy educating my sellers and buyers along the way. Putting People, Before Profit.
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