When you’re buying a home, you’ll often hear the term earnest money deposit—but what does it actually mean?
An earnest money deposit is the money a buyer submits when the purchase and sale contract is signed. It shows good faith and tells the seller you’re serious about moving forward with the purchase.
📌 Where does the earnest money go?
Here’s how it typically works.
1️⃣ Once the contract is signed, the buyer delivers the earnest money deposit.
2️⃣ The funds are placed into a neutral escrow account, usually held by a real estate brokerage or an attorney in Vermont.
3️⃣ The money stays safely in escrow while inspections, financing, and other contract contingencies are completed.
💰 Why a strong deposit matters:
A larger earnest money deposit can make your offer more attractive by showing financial strength and commitment, especially in a competitive market.
🏡 What happens at closing?
At closing, the earnest money deposit is credited back to the buyer and applied toward the down payment and/or closing costs, reducing the cash needed to close.
Understanding where your earnest money goes and how it’s handled helps make the home-buying process clearer and less stressful.
If you’re thinking about buying, I’m here to guide you every step of the way.
Mark Montross,
Catamount Realty Group
85 Prim Rd., Suite 202
Colchester, VT 05446
Mark@catamountrealtygroup.com
802-825-1353