Buyer Submits Earnest Money Deposit (EMD)

TLDR: The earnest money deposit is the buyer’s promise to abide by the terms of the agreement. The buyer will submit their EMD after the contract is signed by both parties.

For a review on Earnest Money Deposits outlined in Step 2, see here

What happens to the Earnest Money Deposit? 

After the contract is signed, the buyer will submit an earnest deposit to the title company or attorney, where it's held in an escrow account until closing. If the transaction closes, the buyer's funds end up going toward the house at closing. If the buyer doesn't adhere to the terms of the contract, you may be entitled to the earnest money deposit. However, if the buyer backs out for a reason stipulated in the contract, they will have their earnest money returned to them. 

Under what circumstances will I get to keep the EMD?

"What if the buyer demands a complete renovation after they see the inspection report? What if the house they have to sell before they buy my house doesn't sell? What if the house doesn't appraise?"

When in doubt, look to the contract. The only circumstances under which the buyer is allowed to terminate the contract are outlined in the contract. If the buyer backs out of the agreement for any reason not previously agreed upon, then you get to keep the earnest money deposit. Unfortunately for you, most of the reasons a buyer might back out–e.g. their financing falls through, the house doesn't appraise, etc.–are legitimate, pre-approved reasons that are usually included in the contract as contingencies. This means that the buyer will have their earnest money deposit returned to them and you'll have to put your property back up on the market.