Richmond VA Real Estate - What is EMD?
As your Richmond VA real estate agent
I have been asked this question many times, especially from first time home buyers. Once you find the house you want to call home, you will make an offer to the seller. In that offer you will include what is called EMD, which stands for Earnest Money Deposit.
What exactly is EMD and what happens to your money? An Earnest Money Deposit
is the amount you, as the buyer, are willing to "risk" should you default on the house. You will not lose this money if you can not waive contingencies outlined in the contract, such as securing financing. However, you may lose the money if you simply get cold feet or purposely sabotage your loan.
The amount of EMD that you put down is often thought of as how serious you are about purchasing the home. The more earnest money you put down, the more secure the seller feels. After all, should you default, the seller may keep this money as a sort of compensation for the time off market while under contract with the defaulting buyer.
As a listing agent, my goal is to secure the highest amount of EMD we can. And the opposite holds true when representing a buyer. In many cases, the Earnest Money Deposit is held by the brokerage of the buyer's agent and it is deposited into an account until closing. At the time of closing, the EMD is applied to the buyers down payment.
So, how much do you put down for an Earnest Monday Deposit? That all depends on individual situations. I personally feel 1% of the purchase price is a reasonable amount for EMD. Again, this varies greatly from transaction to transaction. If you know you are in a multiple bid situation, a higher EMD could show the seller you are the most serious buyer prompting them to select you to work with.
Need additional information on EMD or have other questions on the Richmond VA real estate
market? Give me, your Richmond VA Realtor
at the RVA Home Team with eXp Realty, a call today at 804-248-8207. I am here to assist!