Buying in Chevy Chase or nearby DC neighborhoods? You will see “earnest money” in almost every offer. It can feel confusing at first, especially if you are a first-time buyer or moving across the DC–Maryland line. The good news is that once you understand the basics, you can use your deposit to strengthen your offer while protecting your interests. In this guide, you will learn what earnest money is, typical amounts and timing in DC, who holds your funds, how contingencies affect refunds, and what happens if a deal falls through. Let’s dive in.
What earnest money is
Earnest money is a deposit you put down to show the seller you intend to complete the purchase. It signals seriousness in a competitive market and gives the seller some security if you default. If you proceed to closing, your deposit is usually credited toward your cash to close.
Your deposit can be returned if you terminate under a valid contingency within the contract timeline. If you default without a contractual reason, the seller may claim your deposit as liquidated damages, or the disposition may be disputed based on the contract and local rules.
Typical amounts and timing in DC
There is no universal rule for deposit size. In DC-area practice, earnest money ranges from a few thousand dollars for less competitive or lower-priced offers to 1 to 3 percent or more of the purchase price in competitive situations. For many DC condos and rowhouses, deposits often fall between a few thousand dollars and the mid five-figure range. Examples you might see include $2,500 to $25,000 or more, depending on price and competition.
Your contract sets the delivery deadline. Local practice often calls for delivery within 24 to 72 hours after ratification, but only the signed contract controls. Some contracts ask for an initial deposit up front and an additional deposit later at a milestone, such as financing approval. Ask your agent what is customary for your price point and neighborhood, then confirm the exact amount and timing in your contract.
Who holds your deposit
In most DC transactions, a title company or settlement agent holds your earnest money in an escrow account. In some cases, the listing broker’s escrow account holds the funds. The contract names the escrow holder and includes instructions to deliver the deposit by wire, check, or other method allowed.
Ask for written confirmation when the escrow holder receives your deposit. Keep that receipt with your contract file. If you wire funds, verify instructions by calling the title company or escrow agent using a known, trusted phone number. Do not rely on email alone, and be cautious of last-minute changes.
Your contract should also explain how the funds can be released. Common triggers include a mutual release signed by both parties, a court order, or an arbitration award. If there is a disagreement, escrow typically holds the funds until the parties reach a written agreement or a binding decision is made.
Contingencies and your refund rights
Contingencies are contractual conditions that must be met for the sale to proceed. Common DC contingencies include:
- Home inspection
- Financing approval
- Appraisal at or above the contract price
- Title review and clearance
- Condo or HOA document review for condominiums
If a contingency allows you to terminate within a stated timeframe, and you give proper notice on time, you are typically entitled to a return of your earnest money. The key is to follow the contract’s notice procedures and meet every deadline. If a contingency is not satisfied and you do not terminate within the window, or you waive the contingency and later try to cancel, your deposit could be at risk.
Best practices include sending notices in writing, confirming receipt, and saving all documentation. Keep inspection reports, lender denial letters, appraisal notices, and your email records. If you decide to waive contingencies to be more competitive, understand that you are accepting more risk to your deposit.
If a deal falls through
When a contract does not close, the outcome for your earnest money depends on the reason and the contract language:
- If you terminate under a valid contingency within the deadline, your deposit is typically refunded.
- If you default without a valid contractual reason or miss a deadline, the seller may claim the deposit as liquidated damages, or seek other remedies named in the contract.
- If the seller defaults, for example by failing to deliver clear title, you may be entitled to a deposit refund and may have other remedies outlined in the contract.
- If both parties agree to cancel, you sign a mutual release and escrow returns the funds per that agreement.
If there is a dispute over who should receive the funds, many DC-area contracts call for mediation or arbitration before litigation. The escrow holder may also file an interpleader so a court can decide. Because disputes can be costly and time-consuming, many are resolved through negotiation, a mutual release, or a mediated settlement.
DC vs. Montgomery County differences
Chevy Chase spans two jurisdictions. Some homes are in the District of Columbia, while others are in Montgomery County, Maryland. Your contract form and certain procedures depend on the property’s location.
- DC properties use DC-area contract forms and escrow provisions. Maryland properties use Maryland forms and may have different timelines and fee structures.
- Transfer taxes, recording fees, and some remedies differ between DC and Maryland. Confirm the correct jurisdiction with your agent and settlement company so you know which rules apply.
- Local norms for deposit size and speed can vary by neighborhood and between DC and Maryland. Ask your agent for neighborhood-specific guidance before you structure your offer.
How to choose your deposit amount
Your deposit is both a signal to the seller and a risk you manage. Consider:
- Price and competitiveness. Higher-priced or highly competitive listings often expect larger deposits.
- Your financing and contingency strategy. If you plan to keep key contingencies, you may not need as large a deposit to be competitive. If you are waiving protections, a strong deposit may help your offer stand out, but it increases risk.
- Liquidity. Make sure you can deliver on time. If you need to move funds between accounts, plan ahead so you do not miss the deposit deadline.
- Negotiability. The amount is negotiable. Work with your agent to select a number that fits both market norms and your risk tolerance.
Buyer checklist
Use this quick checklist to stay on track:
Before you write an offer:
- Ask your agent for the customary earnest money range in your target area and price band.
- Decide which contingencies you need, and understand how any waiver affects your deposit risk.
At contract ratification:
- Confirm in writing who will hold the deposit and the exact delivery deadline.
- Verify wiring instructions directly with the escrow holder using a trusted phone number.
- Send funds and obtain written confirmation of receipt.
- Organize your timeline for inspection, financing, appraisal, title, and condo or HOA review.
If issues arise:
- Follow the notice procedures in your contract exactly. Send notices in writing and before the deadline.
- Save all records, including inspection reports, lender communications, and emails.
- If you believe you are entitled to a refund, request release in writing and provide supporting documents.
- Consider mediation or arbitration to resolve disagreements. Consult a real estate attorney if needed.
Protect against fraud:
- Confirm wiring instructions with the escrow or title company by phone using a verified number.
- Be skeptical of last-minute changes, new email addresses, or requests to wire to different accounts.
Work with a local guide
A clear earnest money plan can strengthen your offer and protect your interests. You deserve a team that explains what to expect in DC and Maryland, keeps you ahead of deadlines, and negotiates confidently in competitive Chevy Chase markets. If you want step-by-step guidance on deposit strategy, contingencies, and closing logistics, connect with Koki Adasi for a local, concierge experience.
FAQs
How much earnest money do Chevy Chase DC buyers usually need?
- Amounts vary by price and competition, but many DC buyers see ranges from a few thousand dollars to 1 to 3 percent of the purchase price, often $2,500 to $25,000 or more.
Where is my earnest money held during a DC purchase?
- Your funds are typically held in a title company or settlement agent’s escrow account, or in the listing broker’s escrow account, per the contract instructions.
If the home inspection finds issues, can I get my deposit back?
- If your contract includes an inspection contingency and you terminate within the allowed timeframe using the required notice, you are usually entitled to a refund.
What if I cannot get a mortgage after we sign the contract?
- With a financing contingency, a timely lender denial and proper notice typically protect your deposit; without that protection or if you miss the deadline, your deposit may be at risk.
Who decides if there is a dispute over earnest money?
- The escrow holder follows the contract. Many agreements call for mediation or arbitration, and the escrowee may hold funds until a mutual release, arbitration award, or court order is provided.
Are there differences for Chevy Chase homes in Montgomery County, Maryland?
- Yes. Maryland transactions use Maryland contract forms and may follow different timelines and fee structures than DC, so confirm the property’s jurisdiction and follow the correct process.
