Is a E M D asked for when the other party doesn 't believe the buyer is serious? Also if I refuse to put down a earnest money deposit do I risk ending negotiations for the property?
A buyer should always ask his or her own agent questions like this. If you don't trust your agent to give you the right answer you probably have the wrong agent. When you question your agent's judgement you can always ask for an explanation from the agent's broker. That said, what follows is not a specific answer to your specific situation, but some general advice about EMD's.
EMD stands for earnest money deposit. Earnest money deposit literally means money that you've deposited to show you are earnest. Nearly every real estate offer these days will include some amount of earnest money to show that the buyer is serious. Offers without any earnest money generally mean that the buyer lacks the capacity to actually make the purchase or that the buyer doesn't want to risk any money in the transaction.
Nobody likes risk. So what is the risk of putting up an earnest money deposit. An EMD check is in practice often not cashed if the offer is not accepted. An EMD check is usually only cashed when the buyer and seller agree to terms and price. Once that check is cashed it is deposited into an escrow account. That means that the money is NOT in the broker's bank account. That money is in a separate account that does not comingle with the brokerage's funds. Once the money is in that account the money generally only comes out one of four ways:
When the transaction closes. When the sale happens the money is applied to the buyer's expenses and/or down payment.
When a judge gives the money to someone. If the sale doesn't happen and parties cannot agree who to give the money to, a judge will decide who deserves the money.
When both parties agree to distribute the money. Both parties must agree who to give how much money to.
When a sale is canceled. There are many reasons a sale might not happen. Sometimes the buyer can't get financing. Sometimes the home won't appraise. Sometimes buyers and sellers mutually agree to cancel the sale. When that happens the money is returned to the buyer.
So where is the risk? If the buyer acts fraudulently or negligently the EMD is put at risk. That means that if the buyer lies or attempts to defraud the seller then the sale won't happen and the money might be forfeit to the seller or the brokerages involved. This doesn't mean the seller can just take your money if he thinks you've lied. The seller can't take that money. But a judge can take the money and give it to the seller. And the buyer and seller can negotiate to give some or all of the money to the seller.
The Purpose of Earnest Money
When a seller accepts a buyer's offer, the seller takes some risk. The seller takes some risk because when the property is under contract, he cannot sell the property to other buyers who might be interested. In other words, if the seller agrees to a price with some joker who is just playing around and who won't buy the house, the seller might miss out on someone who really wants to buy the house. So sellers want to know that if they are risking something then the buyer is risking something.
How much the buyer is willing to risk is usually a good indication of how solid the deal is. We usually advise our buyers to put down 1% of the purchase price as escrow money, but some buyers put down more . . . sometimes much more. The bare minimum you'll see in most contracts in Northern Virginia is $500 to $1000. Offers with those minimal amounts are rarely accepted, or get a counter offer asking for more earnest money. Very rarely the lower EMD is accepted when the buyer is a veteran using a VA loan, because a VA loan might be more then 100% of the purchase price.
A buyer who puts up a larger EMD is saying to the seller, "I am rock solid. If you accept this deal, you will sell your house." It sort of like when you buy a car and you pull out the cash and show it to the seller. Then the seller knows you are serious. A buyer who puts up a smaller EMD is saying to the seller, "I don't have that much money on hand. I don't want to risk much money because I might not be able to hold up my end of the bargain."
How to get your EMD back.
For more information or to set up an appointment call Nesbitt Realty at (703)765-0300.
Il Porto is located on King Street as it approaches the water in Old Town Alexandria. Il Porto serves home-made pasta and Italian food in a traditional setting and manner.
One dish I highly recommend is the Chicken Parmesana together with the homemade ravioli's. The portions are generous and the food is high quality and prepared with care. A pictorial menu is online.
Il Porto is definitely one of my favorites and together with a few other classics in lower Old Town, it's one of the reasons I really enjoy living and working in Old Town Alexandria.
Are you selling a home this Spring? You might want to consider these tips to improve the value of your home by improving the value of your bathroom. Potential buyers may walk away if bathrooms are outdated and unappealing. Here are some low-cost ways to give the facilities a facelift:
Scrub-a-dub-dub. Give everything, including drawers and cabinets, a deep cleaning.
Paint the walls. Remove aging wallpaper and paint the space with a bright semi-gloss shade made for use in the bathroom.
Replace aging fixtures. Put a tub liner over the old tub and update sinks, toilets, and faucets.
Accessorize. Buy fresh, new linens, rugs, and shower curtains.
5 Sure Signs That Its Time To Sell Your Home
When should I sell my home? This is not always the easiest question to answer. A lot of people don't plan on living in their first, second, or even third home forever, but still knowing when to let go and move on can be tricky. It can feel like ending a long term relationship, it's…
6 Budget Tips For Staging A House To Sell In Arlington
If you are trying to land a great deal for your property in Arlington, then you can't afford to overlook home staging. You'll want to hold a terrific open house- one that leaves the attendees entranced. And the good thing is, you can do that without having to break the bank.
Did you know that this booming metropolitan county exceeds the total population of seven American states and is the most populous region among city areas in not only Virginia, but also Washington? In fact, Fairfax County is home to a whopping 13% of its state’s total population.
What is it about this Northern Virginian county that caused an estimate of 1,015,302 (as of the April 2008 consensus) to make this part of the country their dwelling place?
Formed in 1742 from the northern part of Prince William County, and named after Thomas Fairfax, 6th Lord Fairfax of Cameron, this county is bordered by Potomac River and friendly neighboring regions such as Arlington County, Alexandria, Falls Church, Loudoun County and Prince William County.
Studies conducted have shown that most of the adult citizens, who call Fairfax County their home, are four-year college degree holders and a good number of them have reached even higher educational attainment.
Research has also shown that, aside from being the first county in the US to achieve a median household income of six figures, Fairfax also has the second highest median household income (next to Loudoun County) among counties with 250,000 or more residents.
With those statistics in mind, potential residents can have some level of assurance that they are living among some of the best citizens the nation has to offer. It can also be a plus that they’ll be able to rub elbows with the county’s upper class society.
Aside from that, Fairfax offers people, who are considering the county as their abode, residential areas that will surely fit their unique tastes and preferences. Residential communities like Kingstowne and Burke can give the suburban comfort and security that citizens may be looking for. Meanwhile, areas like Vienna, Huntington or the inner Beltway bustle of Bailey’s Crossroads can offer the convenient accessibility and metropolitan flair required by those more accustomed to a fast-paced, urbanite lifestyle.
With all that Fairfax County has to offer, no wonder people are rushing in to make it their home!
If you're shopping for a home in a particular school district, we have every home listed for sale in every school district in Fairfax County. Because Fairfax County such a large school system there's not enough space here to list all the schools but you'll find them in the links below.
A Record Fair was held at the Artisphere. Vendors and consumers gathered for this day long activity. At the midway point, there was a film screening. Afterwards, the director of the movie had a question and answer session with the audience. Ian Mackaye was in attendance.
Rosslyn is located in the northeastern corner of Arlington County, north of Arlington National Cemetery and directly across the Potomac River from Georgetown in Washington, D.C. The numerous high-rise buildings of Rosslyn appears (in some ways) more urban than nearby Washington.
Added to the mix are new condominiums, lively restaurants and exciting shops, all with easy access to Washington and close-in proximity to Interstate-395, the Pentagon and Ronald Reagan Washington National Airport.