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Earnest Money Today

October 2, 2020 By Doug Francis

Earnest Money is more than just cash.

Really, it’s more than just cash.

Your earnest money or deposit needs to be deposited within the specific timeframe outlined in your home sales contract. That contract will give you the framework and required deadline, but know you need to follow certain specific steps.

As a quick refresher… when you put in an offer to buy a home, your sales contract included a paragraph stating the amount of deposit you will put in escrow if the contract was accepted. This deposit is known as earnest money which demonstrates your sincere commitment to buying the home.

Although many mortgage websites recommend a percentage range to calculate a reasonable earnest money amount, the actual amount may be the key term that helps you win over other competitive offers. Your agent should be able to give you the best recommendation based on the local market, but in the Vienna real estate market large deposits are critical.

Have your deposit ready

Now that your contract has been accepted, delivering your earnest money to the escrow agent specified in your contract is essential. Although the deposit needs to be made in five days in Virginia, the local Realtor contract allows for both parties to agree when the deposit needs to be made.

There are a few ways to deliver the money, to the settlement or escrow agent, but remember it is vitally important that you understand that you need to stay vigilant.

Anti Fraud Warning

Please be extremely aware that there are various email, text, and social media scams involving wiring funds, like an earnest money deposit, involved in real estate transactions nationally. These scams involve authentic-looking emails to get information or will direct users to a fake website that provides fake wiring instructions.

I do not send out instructions to wire funds to my clients.

I tell my clients if they get an email from me or a settlement company, lender, attorney, or another person claiming to be involved, then pick up the telephone and give me a call. My experience has been that your settlement company will send instructions at the start and they won’t change them at any point during the transaction.

Let’s reverify all steps before sending your money anywhere.

If you have been a victim of wire fraud, you should immediately contact your bank to issue a recall notice and file a complaint with the FBI at ic3.gov right now.

Personal Checks

Yes, personal checks are still a thing!

Delivering a personal check to the settlement company can be done in person at their office. It is essential that you get written acknowledgement that they have received the check. They should also email all parties that the earnest money deposit has been received per the contract.

If you must mail the check, it needs to be via an overnight courier like FedEX, USPS, or UPS. That way you can track the envelope and have documentation that the deposit was delivered before the deadline.

Wiring Options

For added protection, your settlement company may use a secure service that protects you and them. This “2020 solution” has reached acceptance as consumers want to limit exposure to fraud and Covid-19.

A good example is Zoccam.com which is a secure platform designed to deliver earnest money deposit checks. Take a tour through the website and you’ll probably kick yourself for not inventing this app.

They also may give you bank routing information directly to their specific account at Bank of America or TD Bank which you should also reverify before hitting “send”.

Protecting your Earnest Money

Earnest money is part of your downpayment and will show up on your closing documents as a credit.

Your real estate agent should explain how you will get this money back if you decide not to buy the home during your home inspection period, or if you get rejected for financing. The process should be clear to you in any contingency that the deposit will be returned in full if both parties agree to void the contract.

You can lose this money if you default on your contract. For example, if you do not provide the required paperwork to your mortgage lender, or do something irrational like buying a new car because it will impact your credit rating and final lender approval.

Talk with your real estate agent about the terms of your sales contract and risky behavior to avoid prior to closing.

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

About Doug Francis

A Realtor specializing in unique and new homes around Vienna, Virginia, Doug started writing a first-hand blog about his everyday real estate experiences a decade ago. In depth, helpful and fun has always been the objective. Outside real estate, he "starred" in a tech commercial for Verisign's "Where the World Clicks" campaign, and was quoted in Money Magazine's Best Places to Live article on Vienna. He's a Boston University graduate who feels morning coffee is non-negotiable.

Being able to guide my clients through many real estate sales, either moving out, moving in, or just across town, has been a rewarding experience that helps when discussing a plan with a future client.

Being able to help them focus and understand our proven sales plan always eases their anxiety of this looming personal task. And, putting it into bite-sized steps always helps them get where they really want to be.

My background… I’ve been an active licensed agent in Virginia for 25 years, work at TTR Sotheby’s International Realty in McLean, and sell homes in all price ranges. I donate to the town tree replacement fund, participate in a neighborhood citizens association, and try my best to stay in shape.

Questions? Email doug@dougfrancis.com or call me at (703) 304-6827 to discuss your plans. 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 have been a full-time Realtor licensed in Virginia since 1991, and cover a big territory specializing in the Vienna real estate market and custom homes for sale.

I have unique knowledge of digital real estate marketing ~ and my marketing starts here. My elite clientele has been attracted to my results-oriented strategy for years, and I am accepting new clients now.

Thanks for reading... and feel free to contact me at 703-304-6827 or send me an email at doug@dougfrancis.com anytime!

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

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