What is an earnest money deposit?

An earnest money deposit (EMD) is a type of payment made in the District of Columbia (DC) for residential real estate transactions. It is part of a buyer’s initial offer to purchase a home, and is held in trust by a neutral third-party until closing. The EMD shows the seller that the buyer is serious about purchasing the property. In DC, the EMD is typically between 1 and 3 percent of the purchase price and is typically entered into a contract upon acceptance of an offer. Once the terms of the contract are met, the EMD is refunded to the buyer. There are some cases where the EMD is not refunded, such as if the buyer breaches the contract. If a buyer is unable to secure the property, then the EMD is refunded. In some cases, it is held in escrow and released when the closing documents are signed. It is important to note that the EMD is generally non-refundable if the buyer backs out for any reason other than the seller not fulfilling the terms of the contract. The EMD is just one way for a buyer to demonstrate their interest in a property. It is also a safeguard for the seller in case the buyer does not fulfill their end of the deal. By making an EMD, buyers are showing the seller that they are serious and committed to the transaction.

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What is an earnest money deposit?

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