What is an Earnest Money Deposit – North Scottsdale Real Estate – The Precision Team

An Earnest Money Deposit is like a placeholder protecting the seller in case the buyer goes into default. An EMD is the seller’s sole remedy for buyers default so it has to be large enough that the sellers feel comfortable taking their home off the market. If the EMD was $20 the buyer might be more willing to tie up the property and walk away from the deal at the last second leaving the sellers in a terrible predicament. So long as the buyer does not go into default, which is willful failure to perform the terms of the purchase agreement, the earnest money deposit reverts to the buyer at closing and they can use the money as needed. There are several clauses in the purchase agreement (inspection period, mortgage clause) to protect the buyer and in turn their earnest money deposit.