What Is Earnest Money?
Earnest Money: A good-faith deposit, often 1% to 3% of the price, held in escrow and credited to you at closing.
Also called: earnest money deposit, EMD, good faith deposit
Earnest money is a deposit you make after your offer is accepted, to show the seller you're serious. It's held by a neutral party, usually the escrow or title company, and applied to your cash to close.
How much
Often 1% to 3% of the price, though it varies by market. A larger deposit can strengthen an offer.
When it's due
Usually within 1 to 3 business days of the ratified contract, by wire, cashier's check or a secure payment link.
Can you get it back?
- Yes, if you cancel under a contingency within its deadline, or the seller defaults
- Usually not, if you back out for a reason the contract doesn't allow, or miss a deadline. The seller may keep it as damages.
Good to know
Your lender will ask for proof the earnest money came from your own documented funds. Always confirm wiring instructions by phone to avoid wire fraud.