EMD in California Real Estate: What Every Buyer and Seller Should Know

Buying or selling a home in California—especially in markets like Silicon Valley—means navigating multiple steps, unfamiliar terms, and fast-moving timelines. One of the most important (but often misunderstood) pieces of the transaction is the Earnest Money Deposit, commonly called the EMD.

As someone who works hands-on with clients every week, advising buyers and sellers through competitive negotiations, here’s my professional break-down of what you absolutely need to know.

⭐ What Is an EMD?

An Earnest Money Deposit is a good-faith deposit that a buyer submits shortly after the seller accepts their offer. It shows seriousness and commitment, and it reassures the seller that the buyer is ready to move forward.

The EMD is held by a neutral third party—usually the escrow or title company. It is never handed directly to the seller.

⭐ Why Is the EMD Important?

1. It Shows Serious Intent

Putting money on the line signals to the seller that you’re committed. Once the EMD is received, the seller feels secure pulling the home off the market and investing time in inspections, disclosures, and contract steps.

2. It Protects Both Sides

If a buyer backs out without a contract-approved reason, the seller may be entitled to the EMD.

If the deal falls through due to contingencies—inspection, appraisal, or financing—the buyer typically gets the EMD back.

3. It Strengthens Your Offer

In Silicon Valley, strong EMDs are the norm.

Competitive offers often include 3% of the purchase price or more.

A strong EMD signals confidence and can make your offer stand out.

⭐ How Does the EMD Process Work?

Typical Amount

Most EMDs fall between 1% to 3% of the purchase price.

In multiple-offer situations, buyers often go higher to boost competitiveness.

Payment Timeline

In our market, buyers usually submit the EMD within:

1 business day of offer acceptance

via wire transfer or cashier’s check

This quick turnaround is standard practice in Silicon Valley.

Where the Money Goes

The EMD is held securely in the escrow account until the transaction closes.

What Happens at Closing?

The deposit is applied to:

the buyer’s down payment, or

their closing costs.

When Is the EMD Refunded or Forfeited?

Refunded if the buyer cancels for reasons protected by contingencies.

Forfeited if the buyer defaults or backs out outside the contract allowances.

⭐ My Perspective as a Negotiation-Focused California Realtor

Over the years, I’ve guided hundreds of buyers and sellers through this process, and the EMD is more than just a line item—it’s a strategic tool.

A strong EMD can:

elevate your offer in a multiple-offer environment

communicate seriousness without saying a word

help secure the property you want, even if you're up against stronger competitors

But just as important, you need clearly written contingencies, defined timelines, and a reputable escrow company to protect your interests.

I walk every client through these details because the structure of your EMD can truly make or break your position in the negotiation.

⭐ Final Thoughts

Whether you're buying your first home or preparing to list your property, understanding the Earnest Money Deposit is essential. It protects both parties, strengthens offers, and plays a major psychological role in negotiations.

If you ever feel unsure, confused, or curious about how to make your EMD work for you, I’m here to walk you through every detail—confidently and clearly.

Once again, Shannon Ellison here—educating and navigating so you can move forward with confidence.