Earnest Money Deposit

If you recall, we went into detail about the Earnest Money Deposit in the Offers course. Upon escrow opening, the buyers must give their earnest money deposit to the escrow company. The escrow company will credit the buyers and hold the funds in the escrow trust account until closing. Earnest money deposit funds are paid via wire transfer or a certified bank check.

Escrow companies do not like to accept personal checks, because if they bounce, the escrow is subject to cancellation. So even though the buyers sent you a copy of their EMD check with their offer, the buyer’s agent will typically advise them to submit a certified bank check instead. Even though it’s not your responsibility to make sure the EMD is submitted, you will need to follow up with the escrow company to verify that the funds were received.

Often the escrow company will send you a copy of the buyer’s EMD along with the Escrow Opening Package of docs. If you don’t receive it within the timeframe required by the purchase contract, contact the buyer’s agent and the escrow officer via email and request an update.

If a buyer does not submit their EMD funds within the time frame required by the purchase contract, the purchase is subject to cancellation. As the seller’s agent, be aware that it could be a red flag that the buyer is having doubts about the purchase, or simply does not have the funds required. Either way, you should be on alert.