What is an EMD??

Real Estate Agent with Real Living Kee Realty


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



So 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 deposit is typically held by the buyers agent in an escrow account, but if purchasing a bank owned home or some short sale listings, it's not uncommon for the listing agent to hold it in escrow. Either way, regardless of who's holding it, it's still your money and will be credited to you at the closing.



Is it possible to lose your emd if you don't close? The answer is yes, it is possible but not very common. I would say, make sure you read your purchase agreement to get all of the details. Typically as long as you backed out of the deal within the terms and conditions of your contract you will get your money back. For example: if you back out of the deal because you are dissatisfied with your private 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. Every situation is different. It could be any amount ranging from as low as $500 to as high as $5,000 or more. Many people don't want to tie a large amount of cash up until closing, but one thing to keep in mind ..... the higher the emd the stronger the offer looks. When dealing with multiple offer situations, many times it is recommended to put down a strong emd. Consult with your buyers agent on how much you should be putting down.


Note: when purchasing a bank owned home there is usually a minimum emd required.


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 anywhere in Macomb County give me a call or email and I'd be happy to assist you. 


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 Mike Mitchell -REALTOR®                                                               
 Real Living Kee Realty 


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 Mike Mitchell - Real Living Kee Realty     


Comments (5)

Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL

Mike - You're right, a lot of people don't know what these acronyms mean. Great explanation of what EMD stands for.

Feb 26, 2014 12:28 AM
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Mike- I'm not sure I would have known what EMD stood for!   It's good that you answered some questions as well because I'm sure that even if you know what EMD stands for, you may not know much else about it. 

Feb 26, 2014 01:26 AM
Mike Mitchell
Real Living Kee Realty - Saint Clair Shores, MI

Hi Michelle, thanks! 

Feb 26, 2014 11:56 PM
Mike Mitchell
Real Living Kee Realty - Saint Clair Shores, MI

Hi Kathy, glad I could share this info :)

Feb 26, 2014 11:58 PM
Suzanne Otto
Six Twenty Designs - Lansdale, PA
Your Montgomery County PA home stager

It's so easy to rattle of these terms because you use them everyday. We have to remember our clients don't!

Feb 27, 2014 01:44 AM