What is an earnest money deposit?

An earnest money deposit is a sum of money given by a potential home buyer to demonstrate their seriousness in buying the property. In Delaware, the earnest money deposit is typically held in escrow until the transaction is completed. This money is usually collected by a real estate broker or other escrow agent. When an offer on a property is made, the buyer will often include a sum of money that is considered an earnest money deposit. This deposit acts as security that the buyer is serious about purchasing the property and that they are indeed able to commit to the purchase. The earnest money deposit is typically put in an escrow account, which is where it will remain until the transaction is completed. Ultimately, the earnest money deposit is a financial protection for both the buyer and the seller. If the buyer backs out of the contract, the seller will have the earnest money as security and the buyer will lose the money they put in as the deposit. Additionally, if the seller backs out, they will lose the deposit and the buyer will be able to recoup the money paid.

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What is an earnest money deposit?

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