When you’re ready to make an offer on a condo, you’ll likely include something called an earnest money deposit — or EMD. It’s your way of showing a seller that you’re serious about buying and that you intend to follow through once your offer is accepted.

Handled correctly, the EMD is a simple and routine part of the purchase process. Handled carelessly, it can delay your contract or even cost you money. Here’s what every smart buyer should know.

💰 What Is an Earnest Money Deposit?

An earnest money deposit is a good faith payment made by the buyer when submitting an offer. It shows the seller that you’re committed to completing the purchase if your offer is accepted.

Think of it as putting some skin in the game. Without it, a seller has no financial assurance that you’re truly ready to buy.

💵 How Much Should You Expect to Pay?

There’s no set amount required, but in the Arlington condo market, EMDs typically range from 1%–3% of the purchase price.

For new construction condos, builders often require much more — sometimes as high as 10% — because they’re committing to build or reserve a unit that could take months to deliver.

In multiple-offer situations, a larger EMD can make your offer stand out. Sellers see it as a sign of strength and confidence.

⏰ When Is the EMD Due?

Once your offer is accepted and the contract is ratified, the deposit is typically due within three business days.
Your agent will help ensure it’s delivered on time — usually via wire transfer or certified check to the escrow holder.

⚠️ What Happens If It’s Not Paid on Time?

If the earnest money isn’t received by the deadline, the seller has the right to void the contract.
From the seller’s perspective, a missing deposit signals uncertainty about your commitment or ability to perform.
Submitting the EMD promptly is one of the simplest ways to keep your offer — and your reputation — solid.

🏦 Who Holds the EMD?

The EMD isn’t given directly to the seller. It’s held in escrow by a neutral third party, such as the settlement company, real estate brokerage, or sometimes an attorney.
The funds stay safely in escrow until closing or until both parties agree in writing on how they should be released.

💪 Why a Bigger EMD Strengthens Your Offer

A strong earnest money deposit can help your offer rise to the top in a competitive market.
To a seller, a larger EMD says, “This buyer is serious, qualified, and ready to close.”
It provides extra assurance that you won’t walk away lightly — which can sometimes matter more than a slightly higher offer price.

⚖️ Can You Lose Your EMD?

Yes — but only under specific conditions.
If you default on the contract without a valid contingency (for example, backing out after waiving your financing or inspection contingencies), the seller may be entitled to keep your deposit as liquidated damages.

What Are “Liquidated Damages”?

“Liquidated damages” is a legal term meaning a pre-agreed amount of compensation if one party fails to perform their contractual obligations.
In real estate contracts, that amount is usually the earnest money deposit itself.

Accepting the EMD as liquidated damages lets both sides avoid a drawn-out legal fight over how much damage was caused.

However, the seller isn’t required to accept the EMD as full settlement.
In rare cases, a seller could choose to reject the deposit and instead pursue the buyer in court — either for greater financial damages (such as a lost sale in a declining market) or even to compel the buyer to complete the purchase.

While uncommon, these cases underscore how serious it is to default on a real estate contract.

📜 What Happens to the EMD at Closing (or If the Deal Falls Through)?

If the transaction closes, your EMD is simply applied toward your down payment and closing costs.

If the deal doesn’t close, the escrow agent can only release the funds after both parties sign a release.
If there’s a dispute over who should receive it, the money remains in escrow until a court order determines the outcome.

🧠 Frequently Asked Questions About Earnest Money Deposits

❓ Is earnest money the same as a down payment?

No. The earnest money deposit is submitted early with your offer to show good faith. The down payment is paid at closing and represents your equity in the property. Your EMD is usually credited toward your down payment when the sale closes.

❓ Can earnest money be refunded?

Yes. If you cancel the contract for a valid reason covered by your contingencies — such as financing, appraisal, or inspection — your EMD is typically refunded in full.

❓ Who gets the earnest money if the deal falls through?

If the buyer voids the contract properly, the buyer usually gets it back.
If the buyer defaults without cause, the seller may keep it as liquidated damages.
If there’s a dispute, the funds stay in escrow until both parties sign a release or a court decides.

❓ Can I increase my EMD after contract ratification?

Yes. Buyers sometimes increase the deposit after contingencies are removed to show continued commitment and strengthen their standing before closing.

❓ Is an EMD required for every home purchase?

Technically no — but nearly every seller expects one.
Submitting an offer without an EMD makes it look weak and could cause a seller to dismiss it altogether.