How do EMDs work in regular real estate transactions?

On Behalf of | May 10, 2022 | Uncategorized |

For most real estate transactions in New York, buyers will make an earnest money deposit (EMD) when they make an offer for a property, and the person or organization selling the property has accepted it. Rules for EMDs are slightly different, depending on the type of property sold.

What is an EMD?

In real estate transactions, buyers commonly offer EMDs to show that they are serious about proceeding with acquisition of a property after agreeing on a sales price. This deposit goes toward the sale price of the house, building or other type of property in question. In a regular real estate sale, the real estate brokerage or an escrow company receives the payment. This procedure differs from a short sale or real estate owned (REO) property, where the previous owner defaulted on mortgage payments. In these instances you would pay the EMD directly to the company that repossessed the property.

Can I get my EMD money returned?

In most cases you can reclaim your earnest money if something goes wrong or if the property doesn’t appraise at the value specified. Not all scenarios qualify for a refund. If you simply change your mind, or if you fail to meet the timeline in the contract, you won’t get the money back.

Some real estate transactions can become complicated

Real estate transactions are often fraught with legal and practical issues. Just when you think the transaction is going smoothly, you hit an obstacle that requires resolution.

Alost any real estate transaction can cause you to lose money if you don’t pay attention to contracts and other details. Before signing or going through any real estate deal, make sure you understand your risks. Building reasonable contingencies into contracts can help protect your position.
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