Understanding Earnest Money Deposits
What is an Earnest Money Deposit (EMD)?
An earnest money deposit (EMD) is money a buyer provides with an offer to show they are serious about purchasing a property. The amount varies by property but is typically a fixed amount or a percentage of the bid or purchase price.
Deposits demonstrate commitment. They show the seller that the buyer is prepared to move forward and has the ability and intention to complete the transaction.
Why are buyers expected to post an earnest money deposit?
Real estate transfers take time and involve more than a simple exchange of money and keys. Because sellers incur carrying costs and remove their property from other opportunities while under contract, they need assurance that a buyer is ready, willing, and able.
An earnest money deposit helps protect the integrity of the transaction and reduces the likelihood of non-performing buyers.
Presenting & Handling Deposits
How should I present my deposit?
Earnest money deposits must be provided in certified funds. Acceptable forms include:
- Cash
- Cashier’s check
- Wire transfer
Due to federal reporting requirements (Form 8300), any payment involving more than $10,000 in cash requires additional disclosures. For convenience and compliance, cashier’s checks or wires are strongly encouraged for deposits over this amount.
We are unable to accept personal checks, business checks, credit cards, debit cards, or mobile payment services (Zelle, Venmo, Cash App, etc.).
Who should the cashier’s check be made payable to?
A cashier’s check may be made payable to yourself or Ashland Auction Group, LLC.
If your check is made payable to yourself and you become the winning bidder, you must endorse the check over to Ashland Auction Group, LLC at the conclusion of the auction.
Banks rarely allow business-to-business endorsements. A check made payable to a business other than Ashland Auction Group, LLC cannot be accepted as a verifiable deposit. When in doubt, make the check payable to yourself or directly to the auctioneer.
What happens to my deposit?
Your earnest money deposit is held in a licensed escrow account according to the Terms of Sale. The escrow agent safeguards the funds until settlement, at which point the deposit is applied toward your purchase.
Can I request a refund of my deposit?
Escrow agents may only release funds under specific circumstances. A refund can occur if:
- The transaction is terminated or consummated;
- Both parties provide written instructions directing how the money should be released;
- A court issues an order regarding the funds; or
- The broker follows a statutory notification process outlined in Maryland law.
Escrow regulations exist to protect both buyers and sellers. Even if an agent sympathizes with your situation, they legally cannot make unilateral decisions about escrow funds. Buyers are encouraged to review all Terms of Sale before bidding.
Earnest money deposits are binding. Only bid if you are fully prepared to complete the purchase and provide certified funds at the required time.
Pre-Authorization Charges (Not a Deposit)
What is a pre-authorization charge?
A pre-authorization charge, sometimes called a “good-faith authorization”, is a temporary hold placed on your credit or debit card during bidder registration. It is not a payment, not collected by Ashland Auction Group, and not part of your earnest money deposit.
Why does Ashland Auction Group place an authorization?
This temporary hold verifies that a bidder’s card is valid and that the bidder is a legitimate participant. It helps maintain a fair auction environment by reducing fraudulent accounts and non-serious bidders.
How long does the authorization remain on my account?
If you are the winning bidder, we will release your credit card hold immediately after we receive your deposit. If you did not win the auction, we will release the funds immediately after the auction ends. Most institutions remove authorizations within 24-72 hours. Since no funds are captured, the hold typically falls off automatically once the bank’s authorization window expires.
Does a pre-authorization count toward my deposit?
No. Pre-authorization charges are completely separate from your earnest money deposit. If you win the auction, you must still provide your deposit in certified funds as outlined in the Terms of Sale. The authorization is never applied toward your deposit amount.