Buying a home in Henrico comes with a new term you may not know yet: earnest money. It shows sellers you are serious and helps your offer stand out, especially in spots like Short Pump or Lakeside. If you are a first-time buyer, it can feel like one more thing to track. In this guide, you will learn what earnest money is, how much to expect, when it is due, and how to protect it so you can move forward with confidence. Let’s dive in.
What earnest money means in Henrico
Earnest money is your good-faith deposit that goes into escrow after your offer is accepted. It tells the seller you plan to close. At settlement, it is usually credited toward your down payment and closing costs. It is not an extra fee.
Who holds your deposit
In Virginia, the deposit is held by one of a few escrow holders named in your contract. It can be the listing broker, your broker, a title company or settlement agent, or an attorney if everyone agrees. These escrow holders must follow Virginia trust account rules, and you should receive a written receipt or escrow agreement for your records.
The contract controls
Most buyers and sellers in Virginia use standardized residential contract forms. Your contract will state the deposit amount, when it is due, who holds it, and what happens if someone defaults. Many forms include an option that lets a seller keep the deposit as liquidated damages if a buyer defaults and that option is selected. Your rights come from the exact language and deadlines in your signed contract.
Typical amounts and timing
When you pay it
You usually deliver earnest money soon after the offer is accepted. Common practice is 1 to 5 business days, and the exact deadline is written into the contract. Sellers expect prompt delivery. Missing the deadline can be treated as a buyer default unless both sides agree to change it in writing.
How much to expect in Henrico
There is no single rule for how much you must deposit. Many agents use about 1 percent of the purchase price as a guideline. In competitive situations, buyers often offer 1 to 2 percent or more to strengthen an offer. Fixed amounts are also common. For modest or entry-level homes, you might see $1,000 to $3,000. For mid-range homes, deposits often land between $2,500 and $10,000. In some competitive segments, including parts of Short Pump, sellers may expect larger deposits. For new construction, builders often require staged deposits that can total 1 to 5 percent of the price.
When your earnest money is refundable
Contingencies that protect you
Several common contingencies can preserve your deposit if you cancel within the contract’s timelines:
- Inspection contingency. Lets you terminate or renegotiate within a set inspection period.
- Financing contingency. Protects you if you cannot obtain loan approval within the stated period and cancel properly.
- Appraisal contingency. Helps if the appraisal is below the contract price and you terminate under the appraisal or financing clause.
- Title contingency. Allows cancellation if there are unresolved title defects.
- HOA or CCR review contingency. Lets you cancel if the documents reveal restrictions or fees you cannot accept.
- Home-sale contingency. Allows termination if you cannot sell your current home on time, depending on contract terms.
How to keep your rights
Your deposit refund depends on meeting the contract’s rules exactly. You must follow each contingency’s deadlines and give notice the way the contract requires. If you terminate properly within the time frames, the escrow holder typically returns your deposit. If you miss a deadline or do not follow the notice steps, you may lose the protection the contingency provides.
If a buyer defaults
If you default without a contractual right to cancel, the seller may be entitled to keep your deposit as liquidated damages if that option was chosen in the contract. In some cases, sellers may pursue other remedies. Outcomes depend on the facts and the exact contract wording.
Practical timelines and examples
A typical timeline
- Day 0: Offer accepted and contract ratified.
- Days 1–5: Earnest money due to the named escrow holder by the deadline in your contract.
- Days 7–14: Common inspection period window, depending on the contract.
- Days 21–30: Typical financing contingency period tied to lender milestones. Appraisal is often ordered during this time.
- Day 30–45: Many closings occur in this window after ratification. Your earnest money is credited at settlement.
Real-world scenarios
- Starter home around $300,000. Many buyers offer a deposit of $1,500 to $3,000, roughly 0.5 to 1 percent.
- Mid-market home around $450,000 in Short Pump. Competitive offers often include $4,500 to $9,000, about 1 to 2 percent, or a fixed $5,000 to $10,000.
- New construction around $550,000. Builder contracts may require staged deposits that total 1 to 5 percent over several milestones.
Buyer checklist for earnest money
Before you deliver funds
- Confirm the exact amount and delivery deadline in your signed contract.
- Confirm the escrow holder and get written escrow instructions or a receipt format.
- Ask whether the holder is a broker, title company, or attorney.
- Verify acceptable payment methods, such as cashier’s check, wire, or secure electronic transfer, and review any wiring security steps.
After you deliver funds
- Get a written receipt that shows the date received, amount, and escrow account details.
- Put all contingency deadlines on your calendar and set reminders.
- Keep written proof of all notices you send to the seller, such as inspection objections or financing denials.
- Confirm how the deposit will be credited toward your closing funds.
Security tip
Wire fraud is a real risk in real estate. Always verify wiring instructions by calling a known phone number for the escrow or title company. Do not rely only on emailed instructions.
Local tips for Henrico buyers
Market expectations change with supply and demand. In a seller’s market or on well-priced homes with multiple offers, you may want to increase your deposit and pare back nonessential contingencies. In a buyer’s market, you might be able to offer a smaller deposit with stronger protections. Your exact strategy should fit the neighborhood, price point, and the listing’s demand.
Review your specific contract carefully. Confirm who holds the deposit, the delivery deadline, whether the liquidated damages option is selected, and the exact language for each contingency and notice. If your situation involves large deposits, new construction, or a dispute about release of funds, consider getting advice from a local real estate attorney or an experienced agent who can review your contract.
Work with a local guide you can trust
A clear plan for earnest money helps you write a winning offer and keep your deposit protected. If you want patient guidance, neighborhood context, and step-by-step support from offer to closing, our family-run team is here to help. Reach out to Garner Realty LLC to map your deposit strategy and shop homes in Henrico with confidence.
FAQs
What is earnest money in a Virginia home purchase?
- It is a good-faith deposit you place in escrow after your offer is accepted, and it is usually credited to your down payment or closing costs at settlement.
How much earnest money is typical in Henrico?
- A common guideline is about 1 percent of the price, with $1,000 to $3,000 on modest homes and $2,500 to $10,000 on mid-range homes, adjusted for competition.
When is earnest money due after my offer is accepted?
- Contracts often require delivery within 1 to 5 business days of mutual acceptance, and missing the deadline can be treated as a default.
Who holds my deposit in Virginia?
- The escrow holder named in your contract, often the listing broker, your broker, a title company or settlement agent, or an attorney if all parties agree.
When can I get my earnest money back?
- If you cancel properly within a contingency’s deadline and follow notice requirements, the escrow holder typically returns your deposit.
Can a seller keep my deposit if financing falls through?
- If you have a financing contingency and cancel within its terms, your deposit is usually refundable; without that protection, the seller may keep it as liquidated damages if allowed in the contract.
What happens to my deposit at closing?
- At settlement, the escrow holder applies your earnest money as a credit toward your down payment and closing costs, as shown on your closing documents.
