Mike's Macomb County Real Estate Blog

What's an EMD?

Many times in the real estate world we forget that most consumers don't know what the acronyms we use stand for, and why would they. We use these terms everyday. One of the common ones that I tend to rattle off is EMD. So what is an EMD? EMD stands for earnest money deposit.


O.k. so now that we know what the acronym stands for, what exactly is an earnest money deposit?

 When a buyer submits an offer to purchase real estate they also put down an earnest money deposit. This deposit is a sign of good faith, something to show the seller that the buyer is serious about purchasing their home. Once the buyer and seller both agree to a purchase agreement (offer) in writing, the emd is deposited in an escrow account for the buyer. In MI the escrow is typically held by the buyers agent in an escrow account, but most of the times when purchasing a bank owned property, they require the emd to be held in the listing agents escrow account. Either way, regardless of who's holding it, it's still money that is yours and will be credited to you at closing for your purchase.


Can you lose your emd if you don't close? The answer is yes, it's possible but not very common. I would say, make sure you read your purchase agreement to get all of the details. Typically as long you backed out of the deal within the terms and conditions of your contract, you get your money back. Example: if you back out of the deal because you are dissatisfied with your home inspection, as long as you do it in the terms and time limits that was written in your purchase agreement, you would get your money back.


How much should I put down? That seems like a simple question, but it doesn't have a simple answer. The answer is every situation is different. It could be any amount ranging from as little as $500 to $5,000 or higher. Many don't want to tie a large amount of cash up until closing, but remember ...... the higher the emd, the stronger the offer looks. When dealing with a multiple offer situation, many times it is recommended to put down a strong emd. Also, when purchasing bank owned foreclosures a lot of them require a minimum emd.




If you have more questions on earnest money deposits or if you are in the market to buy or sell real estate in St. Clair Shores or the surrounding Macomb County area, give me a call or email and I'd be happy to assist you. To start searching for homes for sale, sign up for a free Listingbook account.


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 Mike Mitchell -REALTOR®                                                               
 Real Living Kee Realty 


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 Mike Mitchell - Real Living Kee Realty     


Comment balloon 2 commentsMike Mitchell • January 04 2011 09:49AM


Mike, this is a fabulous explanation about the earnest money deposits!  Your buyers and readers are going to thank you for it.

Posted by Kris Wales, Real Estate Blog & Homes for Sale search site, Macomb County MI (Keller Williams Realty - Lakeside Market Center) almost 9 years ago

Hi Kris! Good to see you! Thanks so much, your opinion means a lot to me.

Posted by Mike Mitchell, REALTOR (R) (Real Living Kee Realty) almost 9 years ago