Once you have found your dream home in Washington DC, Bethesda, Chevy Chase, or Northern Virginia, the next step is to put down a sum of money to show your commitment to making the purchase. This amount is called your earnest money deposit and if not done correctly, could end up costing you thousands of dollars.
We’ve included below a few common earnest money mistakes that Metro DC buyers have made to help you enjoy a smoother, more stress-free home purchase and avoid losing more money than necessary!
Misunderstanding the deposit
It is important to understand what the earnest money deposit is when you make an offer on a Washington DC area home. The purpose is to provide proof to the seller that you are committed to finishing the sale of the home. It is negotiable between the buyer and seller, but typically earnest money deposits range from 1 to 2 percent of the home’s purchase price; it can also be used as a credit toward your closing costs or down payment.
Not offering enough
The earnest money deposit shows you are serious about the purchase, so not offering enough could force a seller to think twice. Remember that as we head into spring, the market begins to heat up and a home could see multiple offers. If your earnest money deposit is less than the next offer, the seller may skip over yours.
Ignoring the risks of an “As Is” home
When you purchase a home “As Is,” you are essentially taking on all of its problems and imperfections. These homes typically require a nonrefundable earnest money deposit, therefore you need to be extra cautious. Should you need to cancel the sale, you will not get your initial deposit back.
Agreeing to remove contingencies
It is always wise to keep contingencies in place until you are absolutely certain that you are able to close on the home. Removing loan contingencies may mean you lose the extra room you need to negotiate the sale and your earnest money.
It is essential to have an expert to lead you through the home buying process in Washington DC, Bethesda, Chevy Chase, or Northern Virginia this spring. Give The Estridge Group a call today to clear up any questions you may have or for a list of available homes in the DC area!
