How earnest money works, and how to wire it safely

Once your offer is accepted, one of the first things you’ll do is send money. This is the earnest money deposit, and it’s a normal, expected step. It’s also the moment to slow down and handle the wire carefully. Let me explain how the deposit works and how to send it without worry.

The earnest money deposit, often shortened to EMD, is a good-faith deposit that shows the seller you’re serious. It’s typically a small percentage of the purchase price, and it goes into escrow, a neutral third party that holds the money until closing. The deposit isn’t an extra cost. At closing, it’s credited toward your down payment and closing costs. It’s your money, parked safely in the middle while the deal comes together.

When and how it moves

The timing is set by your contract. In a typical California purchase, you wire the deposit into escrow within a few days of your offer being accepted. Here’s the basic flow:

• Your offer is accepted and escrow is opened.
• The escrow company sends you wire instructions, telling you which account to send the deposit to.
• You wire the funds from your bank to escrow.
• Escrow confirms receipt and holds the money.

The money sits with escrow, not with the seller and not with me. It stays there until closing, when it’s applied to what you owe. If something goes wrong with the deal while you’re still protected, the deposit can come back to you.

When the deposit is at risk

This is the part worth understanding clearly, and it’s not as scary as it sounds. Your deposit is protected by your contingencies, the conditions in your contract that let you cancel and get your money back. While your contingencies are in place, you have defined ways to walk away and recover your deposit.

When you remove your contingencies, you’re telling the seller you’re committed. After that point, the deposit is genuinely at risk if you back out without a contractual reason. That’s the whole purpose of the contingency period: it gives you time to investigate, with your deposit protected, before you commit.

So the deposit isn’t a gamble. It’s protected money that becomes committed money at a moment you choose, after you’ve done your homework. If you want the full picture of how removing contingencies changes your position, I wrote about that in the real math on waiving contingencies.

Wiring it safely

Here’s the part I want every buyer to take seriously, calmly and without panic. Wire fraud is real in real estate. The scheme is simple: a criminal sends a fake email that looks like it’s from escrow, with new wire instructions that route your money to their account. The defense is just as simple, and it works every time when you follow it.

Two rules, and they’re the whole game:

• Always verbally verify wire instructions before you send a dime. Call the escrow company at a phone number you already know is real, one you got from me or from a document at the start of escrow, not a number printed in the email. Read back the account details and confirm them by voice.
• Never trust emailed changes to wire instructions. If you get an email saying the account or routing number has changed, treat it as suspect until you’ve confirmed by phone using your known number. Legitimate last-minute changes are rare. Fraudulent ones almost always arrive by email.

A few more good habits:

• Confirm with your own bank that the funds went where they should before assuming it’s done.
• If anything feels rushed or off, stop and call me. A real escrow officer will never be upset that you double-checked.
• I’m always happy to be the phone call you make to confirm. That’s a normal part of my job.

This sounds like a lot, but in practice it’s one phone call to a number you already trust. Make that call, confirm the details out loud, and then send the wire with confidence.

The short version

The earnest money deposit is your own money, held in neutral escrow, credited to you at closing. It’s protected while your contingencies are in place and becomes committed when you choose to remove them. Sending it is simple and safe as long as you verbally verify the wire instructions by calling a number you already trust, and never act on emailed changes without confirming by phone.

When it’s time to send your deposit, call me first if anything is unclear. I’d much rather take that call than have you guess. We’ll confirm the details together and get it done right.