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What is an earnest money deposit?

An Earnest Money Deposit, more commonly known as an EMD, is one of the first steps in the home buying process. Today I will discuss the EMD and how quickly should one be deposited.

An EMD is essentially a good faith deposit to demonstrate to the seller that the purchaser is serious about the transaction and is willing to part with some money in advance of closing to prove his or her willingness to buy.

This is not to be confused with a down payment, which is the remaining amount that the purchaser is going to pay out of pocket to buy the house, and is paid at closing in the form of a wire or a certified or cashier’s check.

The amount of an EMD can vary, depending on the purchase price, the location of the property and the purchaser’s ability to pay in advance. Typically, a larger EMD will make the offer to purchase stronger, since a larger EMD shows to the seller a higher level of seriousness on the purchaser’s part.

Each jurisdiction has a different requirement in regards to how quickly the EMD must be deposited.

Earnest Money Deposit

  • District of Columbia: Earnest money deposit must be deposited within 7 calendar days or 5 business days.
  • Maryland: Earnest money deposit must be deposited within 7 business days.
  • Virginia: Earnest money deposit must be deposited within 5 banking business days.

Keep in mind that in all three jurisdictions, this requirement can be altered by a written agreement between the purchaser and seller.

Consequently, either the number of days can be changed or the EMD can be deposited at an agreed upon date, for example, “upon the removal of all contingencies.” However, once again, keep in mind that this must be in writing and agreed upon by the parties.

Editor’s note: In Maryland, if the EMD is held by a real estate broker, the Maryland Real Estate Commission requires that the broker must deposit the check within 7 business days from when the contract is ratified.  If the EMD is to be held by the title company or any other party, the number of days can be altered. (Thanks to commenter Mike for helping to clarifying this.)


agents, Buying 'n' Selling, contract, Earnest Money Deposit, first time homebuyer, real estate

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