Earnest Money Deposit (EMD)

Definition

Earnest money is a deposit made by the buyer when signing a purchase contract, held by the title company or escrow agent. It shows the seller the buyer is serious. In wholesale transactions, earnest money is typically $1,000-$5,000 and becomes non-refundable once due diligence ends. If the buyer defaults, the seller keeps the EMD; if the deal closes, the EMD is credited toward the purchase price.