Buying a home in Chevy Chase can move fast. You may be asked for earnest money right away, and it is normal to wonder how much to offer, where it goes, and when you can get it back. You want a strong offer without putting your deposit at risk.
This guide explains how earnest money works in Maryland, what is typical in Chevy Chase and Montgomery County, and how to protect your funds through contingencies and timelines. You will see clear examples, local norms, and a simple checklist to keep you on track. Let’s dive in.
Earnest money, explained
Earnest money is a good‑faith deposit you provide when you make an offer or shortly after your offer is accepted. It shows the seller you are serious and ready to move forward. If you close, the deposit is applied to your purchase price or closing costs.
If the deal falls through, what happens to the deposit depends on your contract. Contingencies and deadlines control whether your money is refunded or at risk.
How much is typical in Chevy Chase
Chevy Chase is a higher‑priced, competitive market near Washington, DC. Buyers here often use larger deposits than you see in lower‑priced areas.
- Percentage guide: many buyers offer about 1% to 3% of the purchase price.
- Flat‑dollar guide: you might see deposits in the range of about $5,000 to $15,000, and higher for luxury price points.
- Competitive offers: in multiple‑offer situations, some buyers choose 2% to 5% or more to stand out.
Your number should reflect price point, competition, and your comfort with risk. A bigger deposit can strengthen your offer, but it also increases what could be at risk if you default outside of a contingency.
How to pick your deposit
- Ask your agent about current competition at your target price.
- Review your liquidity and how much you can place in escrow without stress.
- Align deposit size with your contingency plan. If you plan shorter timelines or limited contingencies, a stronger deposit can help.
- Confirm your lender does not require a specific amount. Lenders verify the source and documentation of the deposit, not the size.
Who holds your deposit in Maryland
In Maryland, your contract names the escrow holder. It is commonly a title company or settlement attorney. In some cases a real estate broker’s trust account holds the funds.
What to expect:
- Your contract will identify the escrow agent and how the deposit will be delivered.
- You should receive a written receipt and confirmation when the money is deposited.
- Escrow and trust accounts are regulated. Accurate records and timely deposits are standard practice.
Best practices:
- Confirm the exact name of the escrow holder before you send a wire or check.
- Keep a copy of the wire confirmation or deposit slip and the written receipt from escrow.
- Ask your agent to verify deposit deadlines and that the account details match the contract.
When you pay and key timelines
Your contract sets the timing. Two common approaches are:
- With the offer: you deliver the deposit to show strength.
- After ratification: you deliver within a set period, often within three business days.
Typical, negotiable contract timelines in our area:
- Inspection or due‑diligence: often 5 to 14 days.
- Loan commitment: often 21 to 30 days for a conventional loan.
- Appraisal and financing satisfaction: tied to the loan timeline.
- Closing date: often 30 to 60 days from ratification.
In Chevy Chase, competition can push for shorter inspection periods and faster closings. Shorter timelines may help you win, but they increase your execution risk. Make sure the dates work for your lender and your schedule.
When earnest money is refundable
Refundability depends on the written contract and whether you meet notice deadlines. Common buyer protections include:
- Inspection contingency: if you cancel or negotiate within the inspection period and follow the contract steps, your deposit is typically refundable.
- Financing or mortgage contingency: if you make a good‑faith effort but cannot obtain financing, and you give proper notice within the deadline, the deposit is usually refundable.
- Appraisal contingency: if the appraisal is low and you cancel under the terms, you generally receive a refund.
Always read the notice requirements. You must deliver written notice within the contingency window to preserve your refund rights.
When your deposit is at risk
Your deposit can be at risk if you default outside of your contingencies or miss required notices. Many contracts include a liquidated damages clause that lets the seller keep the deposit if the buyer defaults. If such a clause applies, the seller may not need to prove additional losses.
Common risk points:
- Missing inspection or financing deadlines.
- Failing to send cancellation notices the way the contract requires.
- Waiving contingencies, then trying to cancel later.
- Ambiguity in your contract about how funds are released.
If there is no liquidated damages clause, the seller’s remedies follow general contract principles, which can include specific performance or damages. Discuss any questions with a local real‑estate attorney before you sign.
Protect your earnest money: a simple checklist
- Name the escrow holder in the contract and confirm their details.
- Calendar every deadline on day one: deposit delivery, inspections, appraisal, financing, and closing.
- Send notices in writing and in the exact manner your contract requires.
- Keep proof of your deposit: wire confirmations, receipts, and emails from escrow.
- Do not shorten or waive contingencies without a clear plan and the funds to back up the risk.
- Ask for clear disbursement instructions in the contract that explain how funds are released.
- Loop in your lender and agent on any issues early so you do not miss a deadline.
Local scenarios you might face
Refundable example: You offer a $10,000 deposit with a 10‑day inspection and a 21‑day financing contingency. The inspection finds major issues. You cancel within the inspection period per the contract. Your deposit is refunded.
At‑risk example: You waive the inspection, then later decide to cancel due to concerns. With no inspection contingency, you may forfeit the deposit.
Liquidated damages example: Your contract names the deposit as liquidated damages for buyer default. If you fail to close after contingencies are satisfied, the seller may keep the deposit as the agreed remedy.
Dispute example: Your loan is denied, but the seller claims you did not provide required documents to the lender. The refund is disputed and could go to mediation, arbitration, or court depending on the contract.
Common mistakes to avoid
- Offering a small deposit in a highly competitive price bracket without another way to strengthen your offer.
- Assuming the deposit is automatically refundable. It is only refundable if your contract says so and you follow the steps.
- Ignoring notice rules. If the contract calls for written notice by a deadline, do exactly that.
- Sending money before confirming the exact escrow instructions and account details.
Final thoughts
In Chevy Chase and across Montgomery County, earnest money is a key part of a strong offer. The right amount depends on price, competition, and your risk tolerance. Protect your deposit by using clear contingencies, meeting every deadline, and keeping full documentation.
If you want local, hands‑on guidance from a small team that knows neighborhood norms and contract mechanics, reach out. You will get direct access to the principal broker, clear next steps, and support from offer through closing. Talk to Licia Galinsky to discuss your plan.
FAQs
How much earnest money should a Chevy Chase buyer offer?
- Many buyers use 1% to 3% of the purchase price, or about $5,000 to $15,000 for mid‑range homes, with higher deposits possible in competitive situations.
Where is earnest money held in Maryland purchases?
- It is commonly held by a title company or settlement attorney named in your contract, or in a broker trust account, with a written receipt and timely deposit.
When is earnest money refundable in Maryland?
- It is usually refundable if you cancel under inspection, financing, or appraisal contingencies and give written notice within the contract deadlines.
What if my loan falls through before closing?
- If you have a financing contingency and made a good‑faith effort, you can typically cancel within the deadline and receive a refund, subject to your contract terms.
Can a seller keep my earnest money if I change my mind?
- If you default outside of your contingencies, the seller may keep the deposit, especially if the contract includes a liquidated damages clause.
Is earnest money the same as my down payment?
- No. It is a separate deposit held in escrow that is applied to your price or closing costs at settlement.
What proof should I get after I send the deposit?
- Keep the wire or check receipt and a written confirmation from the escrow holder that shows the amount, date, and account details.
When do I deliver earnest money in a Maryland contract?
- Either with your offer or within a set period after ratification, often within three business days, as stated in the contract.
