What is an EMD?
What is an Earnest Money Deposit (EMD)?
An earnest money deposit is an amount of money that you present with an offer to purchase a property to show your good faith. The amount may vary, but it is usually a fixed amount or a percentage of the purchase price. It is often a considerable amount of money that is used to demonstrate your commitment towards the purchase of the property. In other words, it is used to show that you are serious about following through with the purchase.
Why are buyers expected to post an earnest money deposit?
An earnest money deposit shows that you are serious about following through with the purchase. Real estate property cannot be conveyed as easily as a tangible item. Since the process is more involved than simply exchanging an item for currency and shaking hands, sellers need to know that a buyer is ready, willing, and able. A deposit helps protect a buyer’s interest and holding costs.
How should I present my deposit?
Your deposit will often be required to be presented in the form of certified funds – cash, cashier’s check, or wire transfer. Due to federal regulations, a Form 8300 must be filed for any transaction that receives more than $10,000 in cash in the course of a single transaction or two or more related transactions. For that reason, deposits in the excess of $10,000 are encouraged to be presented in the form of cashier’s check or wire transfer. We are unable to accept personal checks, business checks, credit cards, debit cards, and mobile payment services (e.g. Zelle, Venmo, etc).
I am getting a cashier’s check – Who should it be made payable to?
You may make a cashier’s check payable to yourself or Ashland Auction Group, LLC. If you are a winning bidder and your cashier’s check is made payable to yourself, you will be required to endorse your check over to Ashland Auction Group, LLC.
PRO TIP If you are planning to make a check payable to yourself and endorse it over to the auctioneer if you win the auction, please be aware that banks do not typically allow business checks to be endorsed. For that reason, a check made payable to a business entity cannot be accepted as a verifiable deposit. Unless instructed otherwise, do not make a check payable to a business other than the auctioneer, Ashland Auction Group, LLC.
What happens to my deposit?
Your earnest money deposit is held in an escrow account by an escrow agent, in accordance with the terms of sale. Assuming all goes as expected, the earnest money deposit will be applied towards the purchase of the property..
Can I request a refund of my deposit?
Escrow agents are only allowed to release funds under certain circumstances. Unless one of the following four circumstances occurs, the escrow agent is unable to refund a deposit to a buyer:
- the transaction for which the money was entrusted is terminated or consummated;
- the broker receives proper written instructions from both parties directing withdrawal or other disposition of the money;
- a court orders disposition of the money; or
- the broker has followed a specific procedure of notification to both parties.