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Deposit Amounts and Negotiations

By Doug Francis

Earnest Money Deposit Real EstateSitting at their kitchen table while explaining the sales contract and putting together a competitive written offer, I was asked…

“What’s the earnest money deposit formula in Virginia?”  this Vienna home buyer studiously asked.

This really isn’t an uncommon question because most buyers are reading websites written by mortgage lenders, product marketing, or media companies. Their professional content people (we used to call them writers) write to fit this topic into digestible chunks that people can read on iPhones while crossing a busy street in DC.

Essentially, professional content creators oversimplify every strategic piece of the typical negotiation process. If you ask me, they can make anything sound like it’s not a big deal because, after all, it isn’t their $10,000!

You need to know… there’s much more to it.

Earnest Money Deposit amounts aren’t formula based

Deposit amounts need to be strategic, and not considered a secondary item when you are planning an offer.

This year, specifically, I have seen a lot of inbound offers from agents which have allowed me to collect research data on what consumers are hearing from their agents, the Web, Dad, Uncle Ted, or watching The Property Brothers™.

Home buyers really need to understand that buying someone’s house isn’t like buying a car. Often there is an emotional connection to a home or other subtle influencing factors.

Showing Strength, not just 1%

A Deposit will be credited toward your down payment at the Settlement.

In Northern Virginia, Deposits are put into an Escrow Account within five days of Ratification (agreement).

So what you need to decide is how much you want the house? Is it the one?

If you have decided that it’s the one, then it is critical to make a strong offer since there may be another competitive offer on the table too.

Showing your financial strength is critical, and your Deposit amount needs to reflect that strength.

“Don’t they have any money?”

There were offers that I saw this year when eager home buyers, in multiple-offer situations, attached Deposit checks that were 1% of the sales price.

Needless to say, 1% is a half-baked strategy, and in my follow-up calls with desperate agents, they did not get the concept that allowing a client who includes a 1% Deposit when their offer has a 20% Downpayment offer is a poor strategy.

The earnest money deposit needs to be competitive… or at least impressive.

I have sat with sellers who have had to decide between multiple offers that were almost identical.

The Deposit amounts were:

  1. $4,200
  2. $6,000
  3. $15,000

Which offer do you think really wants to make the deal work? When you prepare an offer to buy a home, it essential to envision how it will be received and interpreted by the seller.

Pro-tip from the field

Your Deposit is only a small piece when submitting an offer, so it is essential that you have a global view of the elements.

A large Deposit can demonstrate, especially in a competitive market, that you are willing to put your money where your mouth is and complete the sale.

Talk with your real estate agent about the protections of the escrow account as outlined in the sales contract, and who the escrow agent holding the money will be.

Filed Under: Blog, Home Buyer Tips Tagged With: Home Buyer Tips, Vienna Virginia

About Doug Francis

A seasoned Realtor specializing in unique and new homes around Vienna, Virginia, Doug has seen consumer behavior, negotiations and communication styles change. At his original brokerage, he was the first agent to add an email address. Imagine! Outside real estate, he plays tennis, is a Washington Capitals fan, spends time with Skipper (his dog), and enjoys the restaurant scene in the DCA. He's a Boston University graduate who feels morning coffee is non-negotiable.

Vienna real estate agent Doug Francis

When we bought our house in Vienna, we were thinking about raising the kids, building an addition, and knowing the neighbors. Today, home buyers are attracted to Vienna because of the sense of community, walkability, and small town lifestyle.

So, what’s next after your 25 years? It’s a conversation many of my clients are having with me as they plan to move to the beach, travel, or get closer to grandkids. Helping them see their future, sell their current home, and move ahead with their updated plan has been an interesting new chapter.

My background: I am an active licensed agent in Virginia, have negotiated hundreds of sales contracts, work at TTR Sotheby’s International Realty in McLean, and still sell homes in all price ranges. I donate to the Town of Vienna tree replacement fund, participate in a neighborhood citizens association, and try my best to stay in shape.

Let’s discuss your moving plans: Email doug@dougfrancis.com or call me at (703) 304-6827 .  Cheers!

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About Doug Francis

I am a Realtor with TTR Sotheby's International Realty® just outside Washington D.C. in Northern Virginia. I'm licensed in Virginia with a focus on Vienna, VA real estate since 1991.

That deep knowledge is valuable, especially in today's fast-paced market where advice is critical. Although many of my clients are personally referred, I am available to help you too and am accepting new clients right now.

Feel free to contact me at 703-304-6827 or email me at doug@dougfrancis.com anytime!

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TTR Sotheby's International Realty
6723 Whittier Avenue McLean, VA 22101

Office: 703-319-3344
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