Let's Talk About Earnest Money Deposit

By
Real Estate Broker/Owner with HomeRome Realty 410-530-2400 311291

 

Let's talk about deposits. You may hear the term EMD, GFD, earnest money deposit, or good faith deposit. The contract is written, with an agreed-upon good faith deposit submitted at the time of the offer. Sometimes, the agreement can call for a second deposit, maybe after the inspection time is complete. This deposit can be held in escrow by either the listing agent, buyer agent, or a third party like a title company.

 

Money

 

Can a buyer get their money back? Not always.

 One reason IF dates are missed. Maryland has a time is of the essence clause, so important it is the first paragraph on the first page, and it is boxed and bolded.

Time is of the essence

That means it is an excellent idea to pay attention to all the dates, including

applying for a mortgage, ordering the appraisal, and the various home inspections. Other timed deadlines are the receipt of HOA or Condo documents. There is a five-day deadline for Home Owner Association review and seven days for Condo Document review.

The more inspections, the more cost to the buyer...the more skin in the game!  

Always read and understand the contract.  With as many as 40-50 pages, the offer needs to be summarized, reviewed, read and understood. Make sure you have gone over the contract line by line.

 

In a transaction, every extra page, paragraph, or blank line, is there because someone had a problem severe enough to get those changes made. 

 

As an agent, you need to protect your client's deposit. On one occasion, I asked the buyer for  $10,000-non-refundable... not an everyday practice.

 The reason, this buyer had written an offer, negotiated, went under contract. Within the week, they withdrew ( buyer's remorse) based on receiving the documents. A week later, they realized they made a mistake and wanted the property!  I had to go back to a very savvy agent and convince them to reconsider this buyer.

What did I have other than their word?

Knowing the seller would be very cautious and in need of assurance,

 I suggested that the buyer offer a nonrefundable $10,000 to the seller if they did not settle. Showing intent to move forward, the seller graciously accepted the offer, and we had a quick, smooth cash closing.

 

Questions about deposits on a home

Call Margaret Rome

 

Margaret Rome

 

Comments (17)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Hello Margaret Rome Baltimore 410-530-2400 it is important to know the details of earnest money deposit when making an offer. Great report. 

May 29, 2021 06:40 PM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

John Pusa, Always a pleasure when you stop by to comment. Hope you are enjoying this holiday weekend!

May 29, 2021 07:11 PM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Margaret. Sometimes you have to put skin in the game to convince the other side you are serious. Enjoy your day!

May 30, 2021 05:31 AM
Brian England
Vacasa - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Earnest money is easy to get back as long as a buyer is adhering to the terms of the contract and a good agent will make sure that they do just that or at least make them aware of certain decisions they want to make that would lead to them not being able to get their earnest money back.

May 30, 2021 06:03 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Margaret - the offer of a non refundable deposit certainly strenthens a deal and puts real skin in the game.

May 30, 2021 06:28 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

In the current market, having a lot of skin in the game will get attention.  The more money down the more serious the buyer and the seller can feel confident about that ofer  well as how it will not be impacted by appraisal.

May 30, 2021 06:30 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Wayne Martin,  "Getting more" skin in the game"  is reassuring to all.

 

May 30, 2021 08:05 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Brian England  Easy to get back only if...

"adhering to the terms of the contract and a good agent will make sure that they do just that.." 

May 30, 2021 08:07 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Grant Schneider A non-refundable EMD is the best kind of  'skin in the game.'

May 30, 2021 08:09 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Ed Silva Big EMD will get attention from the LA and the seller.

May 30, 2021 08:11 AM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Hey there Margaret! You really should write a book of stories of what you have seen in your career. Many of us could learn from you.

May 30, 2021 09:36 AM
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Earnest money amounts, and offerings like non-refundable deposits, certainly do speak volumes to someone's seriousness.  I always laugh when I see someone willing to offer a low appraisal guarantee of $30K or more and have a measly EMD.

May 30, 2021 10:44 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Rocky Dickerson

Appreciate the suggestion!

In my one book, ' Real Estate The Rome Way', and 4,494 posts, I think I have covered a lot of these stories.

Always good to see you!

May 30, 2021 01:07 PM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Chris Ann Cleland, And I agree!

  The EMD speaks volumes about the buyer or agent's intent.  When asking the Realtor® about the "measly" deposit, the answer is the buyer is afraid of losing the EMD.  Yes, and the seller is also afraid.

May 30, 2021 01:14 PM
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

That's good information about earnest money deposits, Margaret.  While it can vary from state to state, your description closely aligns with California.

May 30, 2021 08:03 PM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Myrl Jeffcoat Thanks for sharing that Maryland is quite similar to California re: EMD.

May 30, 2021 08:20 PM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

A fantastic explanation of the EMD, good job Margaret Rome Baltimore 410-530-2400 

Jun 01, 2021 10:23 PM