When we write on offer on a home, we must accompany the offer with what is called an EMD or "Earnest Money Deposit" or "Good Faith Deposit".

The purpose of this money is to show your seriousness as a buyer to purchase the property.

The amount of the EMD is negotiable between the parties and is usually based on the sales price.

The EMD is usually in the form of a check and placed in my escrow account.

Some sellers (mostly foreclosure banks) will require it to be deposited with their escrow account.

According to Michigan State Law, the real estate broker holding this money must deposit it within 48 hours of a bottom lined purchase agreement.

The money will be returned to you at closing as a credit on the settlement statement to be applied to your closing costs.

Except in rare circumstances, your offer will be contingent upon inspections and approval of financing. If any part of the inspection fails or you are unable to obtain financing, your EMD will be returned to you.

If for some reason you decide to back out of the deal for no good reason or hardship, you will likely forfeit your EMD to compensate the seller for time lost on the market.