Earnest Money Deposit
Once we have the signed, executable purchase agreement, and have informed your lender that you are in contract, the next item on the list is to wire your earnest money deposit to the title company. Wiring the funds is customary; personal or cashiers checks are rarely if ever accepted. The wire transfer needs to occur within the first 24 to 48 hours of the contract being signed, weekends not withstanding.
The earnest money deposit, also called an EMD, secures your interest in the property and serves as a guarantee to the seller that you fully intend to purchase their house (assuming nothing unexpected is uncovered during inspections, etc.) If something does arise during the contract phase, you may be able to reclaim this amount. Dawn will write the contract to minimize any losses to your deposit.
Below are six reasons that enable a buyer to recover their EMD:
- The house appraises for considerably less than expected
- Your financing falls through
- Your current home doesn’t sell
- A major issue is revealed during inspections
- The home isn’t finished (applies new construction)
- The seller backs out for any reason
The instructions on how to wire your deposit will be provided by the title company and we will make sure you have this information in a timely manner. Because it can take a day for wired funds to be received, it is very important that you go to your bank and initiate the process right away, preferably earlier in the day than later. If you are out of state, or out of the country, it can take anywhere from 2 to 5 business days for transferred funds to arrive at their destination.
Be aware of money wiring scams. These scams are prevalent and often extremely convincing. Because wiring funds is the same as handing someone cash, you must be 100% sure you know to whom you are sending the money. As mentioned above, Dawn will obtain details for wiring your earnest money from the title company and she or one of The Team will email these instructions to you. For more information on money wiring scams, click here.
Dawn will also let you know exactly how much your earnest money deposit will be. Once the funds are wired, your bank should provide you with a confirmation. Once you’ve initiated the wire, please let us know so we can update the seller’s agent that the money is en route. When the title and escrow office receives the money, they will email a receipt to Dawn for your records.
The title company will hold the funds in an escrow account during the contract phase. It will eventually be applied as part of your down payment.
Now that your earnest money has been wired, let’s talk about why it is vital to not spend any extra money.