What it is
An earnest money deposit (EMD) is a sum the buyer puts down when an offer is accepted, demonstrating serious intent to follow through. It's not a payment to the seller — it's held by a neutral third party (usually the title or escrow company) until closing.
At closing, the EMD is credited toward the buyer's cash to close. It doesn't disappear; it just gets applied.
How much
Typical range: 1–3% of the purchase price. On a $500,000 home, that's $5,000–$15,000.
Higher EMDs signal a stronger offer in competitive markets — sometimes 3–5%+ to stand out. Lower EMDs (1% or less) are common in slower markets or for first-time buyers with limited cash.
How to send it
Once the offer is accepted, you'll wire the EMD to the title or escrow company within 1–3 business days (depending on the contract terms).
Wire fraud warning: EMD wires are a top target for scammers. Always verify wiring instructions by calling the title company directly using a phone number you've independently confirmed — never the number from an email. Send a small test transfer first if your bank supports it.
When you get it back
The EMD is refundable while you're protected by your contract's contingencies. Common contingencies that allow refund:
Financing contingency
If your loan falls through (denial, appraisal issue, etc.) within the contingency window, you get the EMD back.
Inspection contingency
If the inspection surfaces issues you can't negotiate around — or you simply don't want to proceed after seeing the report — you can cancel and recover the EMD within the inspection period (typically 7–14 days).
Appraisal contingency
If the home appraises below the purchase price and you can't reach a renegotiation, you can walk and recover the EMD.
Title contingency
If a title search reveals issues that can't be cleared (liens, easements, ownership disputes), you can cancel.
When you lose it
Walking away outside of contingencies = forfeit. The most common ways buyers lose EMDs:
- Cold feet. Just changing your mind after contingencies have expired.
- Failing to act within deadlines. Inspection contingency periods are short. Missing the deadline waives the protection.
- Waiving contingencies to win. In hot markets, buyers sometimes waive contingencies to compete. Faster path to forfeit if anything goes wrong.
- Default. Failing to perform under the contract terms (not closing on time, not getting financing, etc.).
What if there's a dispute
If the buyer and seller disagree on whether the EMD should be refunded, the title company won't release it without:
- Mutual written agreement, or
- A court order, or
- Specific terms in the contract that govern the dispute
Disputes can drag on. Avoid them by making decisions and communicating clearly within contingency periods.
Practical advice
- Have the EMD ready before you offer. You won't have time to scramble after acceptance.
- Use contingencies wisely. They're your protection. Waiving them increases risk meaningfully.
- Track deadlines. Inspection, appraisal, financing, and final walkthrough each have their own dates. Miss them at your peril.
- Save the wire confirmation. You'll need it as proof at closing if there's any question.
- If something goes wrong, communicate fast. Most EMD disputes can be resolved if everyone acts in good faith and on time.
Questions about your specific contract?
We see hundreds of purchase contracts a year. Reach out if you want a second look at your contingencies before signing.