In McLean’s fast-moving market, your earnest money can make or break your offer. You want to be competitive without putting more at risk than you need to. In this guide, you will learn how earnest money works in Virginia, what typical amounts look like in McLean, how contingencies protect you, and the exact steps to keep your deposit safe. Let’s dive in.
What earnest money is
Earnest money, sometimes called a good faith deposit, shows a seller that you plan to complete the purchase. It is a contractual part of your offer and the purchase agreement governs how it is handled. If you close, the deposit is credited toward your down payment and closing costs. If you do not close, the contract controls whether you receive a refund or the seller keeps the funds.
The goal is simple. Give the seller confidence you are serious while protecting your own position through clear terms and deadlines. In Northern Virginia, including McLean, that balance helps you win in competitive situations without taking unnecessary risk.
How Virginia handles deposits
Who holds the money
- Title or settlement company selected for closing often holds the funds in escrow in Northern Virginia, including McLean.
- Other options include an escrow agent, closing attorney, or a licensed brokerage escrow account if permitted.
- The contract should name the escrow holder clearly to avoid confusion later.
Timing and methods
- Your purchase contract sets the deadline for deposit, often within 3 business days of ratification. Follow the contract exactly.
- You can deposit by personal check payable to the escrow holder, verified wire transfer, or certified funds as allowed by the contract.
- Keep receipts and written confirmation from the escrow or title company.
Contract forms and clauses
- Standard Virginia REALTORS and Northern Virginia Association of REALTORS forms include an Earnest Money section with deadlines, escrow holder details, and remedies.
- Make sure the Earnest Money paragraph lists the escrow holder and the exact deposit timeline and method.
What happens at closing
- Your earnest money appears as a credit on the settlement statement. It is applied to your closing costs or down payment.
Typical McLean amounts
McLean sits within a high-cost, highly competitive Northern Virginia submarket. Deposit expectations are shaped by price point and how many buyers are competing.
- In competitive suburban offers, 1 to 3 percent of the purchase price is common.
- For luxury properties, deposits can reach mid five figures or higher.
- For less competitive situations or lower-priced condos, buyers sometimes use 1,000 to 5,000 dollars or roughly 1 percent.
These ranges are market practice, not law. The right number is negotiable and depends on price, property type, and how aggressively you want to position your offer.
Contingencies and refunds
Contingencies create clear off-ramps that protect your deposit if a key condition is not met. If you terminate properly within the time allowed, you typically receive a refund from escrow.
Common contingencies include:
- Home inspection or a defined due diligence period
- Financing and loan approval by a set date
- Appraisal support for the contract price
- Title review and acceptable exceptions
- HOA or condo document review
- Sale-of-home contingency in select cases
Refund basics:
- You must give written notice by the deadline and in the manner required in the contract.
- If the seller fails a contract condition, such as delivering clear title, you may be entitled to a refund.
- The escrow holder will return funds based on joint written release or instructions allowed by the contract.
When you could forfeit
Forfeiture generally happens when a buyer is in default outside the protection of contingencies.
- Missing a deadline without a right to cure can put your deposit at risk.
- If your contract includes a liquidated damages option and it is selected, the seller may keep the earnest money as the sole remedy.
- If the seller defaults, you may be entitled to a return of your deposit and may have other remedies available under the contract.
Protect your deposit
You can lower risk with clear terms and careful execution.
- Confirm the named escrow or title company in your contract and get written deposit instructions.
- Follow the deposit deadline exactly and obtain a receipt from escrow.
- Use traceable funds. For wires, verify instructions by phone using a trusted number. Never rely on email-only instructions due to wire fraud risk.
- Track every deadline for inspection, appraisal, financing, and disclosures.
- Send notices in writing using the method required by the contract. Keep copies of everything.
- Ask the escrow holder for written explanations if a release is delayed or disputed.
Step-by-step timeline
- Align on strategy and the deposit amount with your agent before you write the offer.
- Name the escrow holder and set a specific deposit deadline in your contract.
- Once your offer is ratified, deliver funds by the agreed method and get a receipt.
- Begin inspections and lender steps immediately to meet contingency deadlines.
- Send any repair requests or termination notices in writing before deadlines.
- If a dispute arises, consult your agent and consider mediation, arbitration, or legal counsel per the contract.
- At closing, confirm the earnest money credit on your settlement statement.
Strategy tips to compete
- Lead with a strong but prudent number. In McLean, 1 to 3 percent is common in competitive offers. Match your risk tolerance and the property’s demand.
- Tighten your deposit timeline. Shorter deposit windows can strengthen your offer if you can perform on time.
- Keep contingencies workable. Shorter, realistic timelines can beat longer ones. Avoid waiving protections unless you are comfortable with the risk.
- Clarify remedies. Understand whether a liquidated damages clause is selected and how it limits remedies.
- Coordinate with your lender. Early underwriting and fast appraisal scheduling help you hit timelines and protect your refund rights.
At closing
Your earnest money is credited toward your costs or down payment on the closing disclosure. Verify the credit appears correctly and matches your contract terms and receipts. If you see discrepancies, raise them with the settlement agent before signing.
When to call pros
- If there is a dispute over a release, or the remedies language is unclear, consider speaking with a real estate attorney.
- For questions about the tax treatment of a forfeited deposit, consult a tax professional, especially for large sums.
When you balance strong terms with smart protections, your earnest money can help you win the home you want in McLean without unnecessary risk. If you want a private, data-informed strategy tailored to your goals, connect with The AiR Group to schedule a private consultation.
FAQs
How much earnest money is typical in McLean?
- In many competitive offers, 1 to 3 percent of the price is common, with luxury deposits reaching mid five figures, while less competitive condos or lower-priced homes may see 1,000 to 5,000 dollars or about 1 percent.
When is earnest money due in Virginia contracts?
- The contract controls timing, often within 3 business days of ratification, so follow the stated deadline and delivery method exactly.
Who usually holds earnest money in Fairfax County?
- A title or settlement company often serves as escrow holder, though the contract may name an escrow agent, attorney, or brokerage escrow account.
When do buyers get their earnest money back?
- If you terminate properly under a valid contingency by the deadline or if the seller fails a contract condition, escrow can release funds per written instructions.
What happens if buyer and seller dispute the deposit?
- The escrow holder typically keeps funds in escrow until a joint release, mediation or arbitration agreement, or a court order directs disbursement as allowed by the contract.
Is earnest money the same as a down payment?
- No. It is a deposit that shows good faith and is credited at closing; you still bring any remaining down payment and closing costs at settlement.
