Earnest Money Deposit

When making an offer, you will present to the seller an earnest money deposit (EMD).  This deposit will ultimately go towards your cash to close, which is made up of your down payment and closing costs.  We will be documenting as part of your loan application the EMD clearing your bank account.

This deposit says to the seller that you plan on purchasing the home, in good faith, provided you meet all stated contingencies.  If you however cancel the contract based on an agreed-upon contingency in the allotted time frame, and the seller signs off on the release of your EMD, you can get the funds back.  If however you cancel the contract not on the basis of any contingencies, the seller would be entitled to retain the EMD.  The handling of the EMD would be decided in the contract release document.

I recommend you discuss the intricacies of the EMD with your real estate agent and the protections provided by your various contingencies.  These contingencies commonly are a home inspection, appraisal, and financing approval contingency.  There are however other additional contingencies which you may read about in your contract of sale.  There is a condo doc review contingency as well if you buy a condo.

A way to strengthen your offer in the mind of of a seller is to limit or eliminate these contingencies, and you may end up discussing this strategy with your real estate agent.  While it puts you at greater risk, it makes your offer a stronger one to the seller since it’s more of a “sure thing.”

As a part of your approval requirements, we will need to verify your earnest money deposit clearing your bank account.  To minimize the documentation required, please refrain from making unnecessary transfers across your bank accounts.  This is because we’ll need to update any accounts from which you transferred funds.

Questions? or 240 479 7658

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