earnest money, home buyers, Virginia real estate, buying a home, deposit, Arlington VA, first-time buyer

What Is Earnest Money and How Does It Work in Virginia?

Earnest money is a deposit you put down when your offer is accepted, to show you are serious. It is held by a neutral third party and counts toward your costs at closing.

What is earnest money?

Earnest money is a deposit you put down when your offer is accepted, to show you are serious. It is held by a neutral third party and counts toward your costs at closing.

It is one of the most common questions we hear from first-time buyers. Here are the plain answers.

The Mike Webb Team (Mike and Claudia Webb, RE/MAX Allegiance) helps homeowners in Arlington, Northern Virginia, Maryland, and Washington, DC get their homes ready to sell and sold.

When do I pay it?

Your contract names the amount and the deadline. It is usually due soon after the seller accepts. Your agent tells you the exact date, and you do not want to miss it.

Who holds the money?

A neutral third party, such as a settlement company or escrow agent, holds it. The seller does not get it until closing. The contract says who holds it.

Does it cost extra?

No. At closing it is credited toward what you owe. If you put down a deposit, you have less to bring to the table later.

When could I lose it?

The contract has protections called contingencies. Common ones cover the home inspection, the appraisal, and your loan approval. If you cancel for a reason the contract allows, and you follow the deadlines, you can usually get the deposit back. If you cancel for a reason it does not allow, the seller may keep it. This is why you read the contract with your agent before you sign. Deadlines matter.

How much should I offer?

The amount is part of your offer, and it can be a negotiating point. A larger deposit can show a seller you are serious. Ask your agent what is common for the home you want, and make sure it is an amount you can afford to put at risk.

Where can I learn more about the buying process?

The Consumer Financial Protection Bureau has plain guides on each step from offer to closing.

FAQ

Is earnest money the same as the down payment?

No. It is a deposit made early, and it counts toward your cash at closing.

Can the seller keep it if the deal falls apart?

Only under the terms of the contract. Read them with your agent.

What if the inspection finds big problems?

Your inspection contingency may let you negotiate repairs, or cancel and get the deposit back. Follow the deadline.

Call or text The Mike Webb Team at 703-350-3884 or visit claudiawebb.com.

The Mike Webb Team, RE/MAX Allegiance. Arlington, Virginia. Equal Housing Opportunity.