Earnest Money Deposit (“Down Payment”)
A deposit made to a seller that represents a buyer’s good faith intention to buy a home. The deposit allows the buyer extra time to secure financing for the rest of the purchase price, and allows time to conduct the title search, property appraisal, and inspections before closing.
- Example : Martha signs a real estate contract agreeing to purchase John’s home for $300,000. When Martha signs the contract, she also writes a check for $30,000 as a deposit or “down payment” that get’s deposited into John’s Attorney’s escrow account. At closing, this money will be released from escrow to John.