real estate

Ask Eli: What is the Earnest Money Deposit and How Much Should it be?

By ARLnow.com Sponsor

This regularly scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: Can you explain how the Earnest Money Deposit is used and what an acceptable amount is?

Answer:

What is the EMD?

I like to define Earnest Money Deposit (EMD) as an amount of money deposited by a Buyer as security for the Seller that the Buyer will perform under the obligation of the real estate contract. Assuming the Buyer completes the purchase transaction, the deposit is deducted against what they owe at closing (down payment + closing costs).

If the Buyer voids the contract within their contractual rights (e.g. Home Inspection Contingency), they receive their deposit back in full. If the Buyer defaults (cannot close or backs out without contractual protections), that money is at risk (more on this later).

In most cases, the deposit is held by the Title Company handling the transaction. They act as an unbiased administrator of the deposit and are also the ones handling the funds at closing. In some cases, one of the brokerages representing the Buyer or Seller may also hold the EMD, but this is much less common today. In either case, the handling and distribution of the deposit funds are strictly regulated to prevent co-mingling or improper distribution if the transaction falls through.

The contract also stipulates when the funds are due. In most cases, Buyers make the deposit within 3-5 days of an offer being ratified (accepted by both parties). If you’re a Buyer preparing to make an offer, I recommend making sure you have enough funds for your EMD in an account that you can easily transfer money out of (wire or check), not a brokerage or retirement fund that takes 5-10+ days for money to clear.

How Much is the EMD?

The amount of the deposit is a negotiable term in the contract and should be given serious consideration by both Buyers and Sellers. Buyers can use the deposit amount to increase the actual or perceived strength of their offer over others. In the current market where many Buyers are competing with other offers, a higher EMD can help you stand out if you’re in a tight race with another offer.

What does it mean to stand out with your EMD? In my opinion, 1% of the sale price is the lowest EMD that should be considered, but 2-3% of the sale price is appropriate in most non-competitive or lightly competitive situations. In competitive situations, it’s common to see at least a few Buyers offer EMD of 5% of the sale price or more. I’ve even seen Buyers offer to post their entire down payment as EMD.

Consider it from the perspective of a Seller. If you’re reviewing multiple great offers on a $1,000,000 home and one has a 2% EMD ($20,000) and the other has a 10% EMD ($100,000), wouldn’t you be drawn towards the offer with a substantially higher EMD?

As a Seller, other terms like price, contingencies and closing date will most likely rank higher in priority than EMD amount but it’s still important to ensure you have an acceptable deposit.

Consider this scenario… if you’re selling a $1,000,000 property and the EMD is 1% ($10,000), is that enough to keep your Buyer locked into the contract if, one week before closing, their dream home hits the market and they begin questioning the purchase of your home? Maybe yes, maybe not.

Is $10,000 enough money for you to offset the hassle and cost of going back on the market and uncertainty of getting the same or better price the second time around? Probably not.

So make sure that the deposit you’re receiving is enough to disincentivize the Buyer from defaulting and enough to offset the cost and hassle for you if the Buyer does default.

(more…)

Morning Notes

By ARLnow.com

‘Click It or Ticket’ Campaign Underway — ” The Arlington County Police Department is reminding drivers about the lifesaving benefits of wearing a seat belt, during the U.S. Department of Transportation’s National Highway Traffic Safety Administration’s (NHTSA) national Click It or Ticket campaign. The high-visibility national seat belt campaign, which coincides with the Memorial Day holiday, runs from May 24 to June 6.” [Arlington County]

Historic Home on Lee Highway for Sale — “Arlington County has less than 50 locally designated historic districts. Of those, 13 are single-family houses and only 10 of them are privately owned. Recently one of the privately owned historic houses came on the market for the first time in 25 years. The Eastman-Fenwick House is a Victorian frame house in the Queen Anne style that was designed by and built for Albert Prescott Eastman in 1876.” [Washington Post]

Local Company Growing Fast — “A dual-headquartered tech startup known for helping brands optimize their sales on Amazon is celebrating a significant growth milestone this week as it enters its 11th year in business. Amify, which is co-headquartered in Cincinnati and Arlington, Va., has reached an annual run rate of $100 million in gross merchandise value, or GMV, for its customers in terms of goods sold, officials said in a Thursday release. That represents a 600% increase in GMV under management over the past year.” [Cincy Inno]

Cemetery Lifting Some Covid Restrictions — “The leaders of Arlington National Cemetery announced that starting Monday, they will no longer limit the number of people gathered at a gravesite. The change comes as the D.C. region lifted many COVID-19 restrictions this weekend.” [Fox 5]

For Some Locals, Cicadas are Free Snacks — “Since the protein-rich cicadas aren’t poisonous, adventurous humans can eat them as well. A cookbook called Cicada-Licious includes recipes for cicada pizza, tacos and cookies. Brian Schwatken in Arlington, Virginia, fried some cicada nymphs with butter, garlic and onions. ‘They are tender, have kind of a nutty taste and are really good,’ he said.” [Voice of America]

County Slated to Buy East Falls Church Property for Flood Relief

By David Taube
1/3

Arlington County is planning to buy a vacant home in East Falls Church that was damaged in the July 2019 flash flooding.

The county intends to demolish the home at 6415 24th Street N. and use the property to make improvements “that would help alleviate or reduce the severity of localized flooding,” Stormwater Communications Manager Aileen Winquist tells ARLnow.

The county acknowledged it doesn’t have to buy the property to make the upgrades, but these kinds of purchases could give it flexibility with solutions.

After the July deluge, county staff evaluated flood-prone areas to find properties that the county could buy and use for stormwater infrastructure improvements, according to a staff report. This property, valued at $683,800, is one of the four high-priority locations that the county identified.

“The agreement is the first negotiated acquisition to be considered by the County Board as part of this program,” the report said.

The County Board is slated to approve the purchase from the home’s owners during its meeting this Saturday.

Winquist said the locations of the three other properties, whose owners were currently not interested in selling, are available via a public records request.

The Department of Environmental Services has not yet settled on the mitigation approach it will take on the 24th Street N. property, which has not been repaired since the flooding, Winquist said.

“The County is still analyzing projects to reduce flood risk in this watershed, which may include upgrading that section of pipe or storm drain,” she said. “The County is exploring the use of this property for infrastructure, detention, or overland relief as part of a larger-scale solution.”

During the 2019 storm, some nearby homes in the neighborhood experienced flooding, “but not to the extent of this property,” Winquist said.

The county will demolish the structure starting at least six months after the sale, expecting to spend some $200,000 to $250,000 to do so. The sellers plan to allow the nonprofit Second Chance to salvage materials from the home ahead of demolition.

Property owners can contact the county to have their property considered for the program, but the county will have to consider such acquisitions carefully given the complexity of the flood mitigation solutions, Winquist said.

Although voters approved a $50.8 million bond in November for various stormwater projects, the county said the money for the property purchase wouldn’t come from that.

Photo (3) via Google Maps

Morning Notes

By ARLnow.com

County Opening Free Testing Site Today — “Arlington County is opening a no-cost, no-appointment, COVID-19 testing kiosk in the parking lot at Courthouse Plaza in partnership with Curative, which operates two additional sites in the County. The kiosk will be open seven days a week from 12-8 p.m., starting Tuesday, April 13.” [Arlington County]

Fmr. Arlington Waiter Now a Real Estate Kingpin — “In 2013, Heider, then 25, was working at an Italian restaurant in Shirlington when his manager became the assistant to a local real-estate agent. When this agent moved to Washington Fine Properties, Heider’s former manager brought him on to help. As the assistant to the assistant, Heider worked without any base pay, making money only when he brought in referrals. At night, he waited tables at the Crystal City Morton’s.” [Washingtonian]

Kitchen Fire at Pike Apartment Building — Updated at 9:10 a.m. — Arlington County firefighters responded to a kitchen fire at the Dominion Towers apartments on Columbia Pike last night. No injuries were reported. [Twitter, Twitter]

Marymount Students Volunteering at Vax Clinic — “Since the start of the spring semester, students in Marymount University’s Nursing program have been using their classroom skills to serve as vaccinators in the fight against the COVID-19 pandemic… [The students] are often on the team of registered nurses and EMS personnel who are on duty for vaccinations at the Lubber Run Community Center in Arlington.” [Marymount University]

YHS Finishes Football Season on Win Streak — “For the Yorktown Patriots, the shortened seven-game high-school football season was like two campaigns. There was the 0-2 beginning when the Patriots lost badly and struggled in all aspects of the game. Then there was the 5-0 finish, when Yorktown was vastly improved in all areas… Yorktown capped its season with a 24-15 victory over the T.C. Williams Titans.” [Sun Gazette]

Last Call: Vote in the Spring 2021 Arlies — Today is the last day to vote for your favorite local places, people and organizations in the spring edition of ARLnow’s Arlies awards. [SurveyMonkey]

Some Call for Lower Real Estate Tax Rate Amid Sunnier Revenue Projections

By Jo DeVoe
Arlington County government headquarters (staff photo by Jay Westcott)

Arlington County’s projected revenue appears sunnier than when County Manager Mark Schwartz first presented his proposed budget for the 2022 fiscal year in February. 

The county can attribute this warmer outlook to two sources: the nearly $2 trillion American Rescue Plan and strong business license tax receipts, Budget Director Richard Stephenson said during a public hearing on the tax rate last Thursday. While he did not specify the revenue from the business taxes, Stephenson said President Joe Biden’s relief bill will apportion $46 million to the county.  

Combined, the influx of cash could mean funding will be restored to libraries, community centers, Arlington Independent Media and the Virginia Cooperative Extension, for example.

Schwartz’s proposed budget delays the re-opening of Cherrydale and Glencarlyn libraries and reduces support for AIM and VCE. Between 2019-20 and the proposed budget, funding for AIM had dropped by 22%, while the proposed reductions to VCE would require the organization to find new funding sources or reduce its programs. Members of the public spoke in favor of restoring funding to these programs last Tuesday.

Still, Arlington County will be leaning on real estate taxes for the lion’s share, 59%, of its revenue. Specifically, it will be relying on increasing residential real-estate taxes due to rising property values as commercial property assessments drop. 

“We’ve experienced some significant reductions to several of our tax revenues and non-tax fees,” Stephenson said. “We were fortunate this past January that real estate assessments came in slightly higher than we were originally projecting. While we experienced a decrease in commercial property assessments, new construction and residential properties increased.”

While property values are rising, Schwartz is proposing to keep the rate flat — at $1.013 per $100 of assessed value — for the upcoming fiscal year. That will mean an overall tax increase for most homeowners.

The County Board is slated to vote on this rate next Tuesday.  

Members cannot increase the rate but they could decrease it, which is something that a few Arlington residents told board members they would like to see.  

While Arlington has proposed holding its tax rate steady, nearby jurisdictions — including Fairfax County and Loudoun County — have proposed lowering or approved a lower real estate tax rate, said Audrey Clement, who is running as an independent for a seat on the County Board. 

“The impetus for tax reductions elsewhere is to provide relief to homeowners hit by rising assessments, even as the pandemic has put a lot of them out of work,” Clement told the board.

She said the county is using falling commercial real estate tax revenue to justify freezing rather than lowering the residential tax rate.

“The county will tell you it can’t afford to reduce the real estate tax rate because the pandemic has drained the commercial real estate tax revenue, but where were your real estate tax rates heading when the county was flush with revenue from corporate tenants?” she said. “They were going up.”

Meanwhile, two residents, William Barratt and Cindy Nelson, both asked the County Board to reduce real estate taxes.

Barratt said the Bluemont Civic Association, of which he is a part, passed a resolution encouraging the board to reduce the tax rate. The homeowner said he and his wife have seen a 15% increase in their taxes in recent years.

“I don’t think this is a wise idea for anyone: poor and rich,” Nelson said. “It’s just not right.”

The stormwater tax rate is set to increase, which Stephenson said will help generate $15.1 million earmarked for stormwater improvements.

Eventually, the county plans to eliminate the stormwater tax completely in favor of a fee based on how much impervious surface covers a given property, Schwartz previously said.

A higher cigarette tax rate is also being proposed that could generate $600,000. Like most of the county’s tax revenue, almost half of that will go toward Arlington Public Schools, Stephenson said.

Images (2-4) via Arlington County

Listing of the Day: 1730 Arlington Blvd #507

By ARLnow.com Sponsor

1/10

Address: 1730 Arlington Blvd #507
Neighborhood: The Weldon Condominium
Listed: $315,000

Take your first step on the housing ladder with this light-filled one-bedroom condominium near everything you want in Arlington.

The large living and dining area overlooks a quiet, treed hillside and provides space for media, dining, reading, relaxing, and working and learning from home. A second desk area is available in the bedroom, and the generous closet space is a plus. The kitchen features light-wood cabinets, granite tops and stainless appliances, while the bath has classic white tile and a large vanity. The heating and cooling system is nearly new. Fresh, neutral decor and gleaming floors enhance the home’s appeal.

Two reserved parking spaces come with the condo, and the low condo fee of $445 per month includes all utilities. Enjoy the Weldon’s exercise room, rooftop deck with panoramic views of the Washington and Rosslyn skylines, and a secure lobby for package deliveries. As a bonus, you can see the caisson horses graze on the hillside at Fort Myer.

Jog to the Iwo Jima Memorial to hear the Netherlands Carillon, and stop at the venerable Quarterdeck for a sandwich and beverage on the way home. Walk or bike to the Courthouse Metro Station and for shops, restaurants, farmers market and nightlife. You’ll have an easy commute to Washington, the Pentagon, National Airpot, Fort Myer/Henderson Hall, Rosslyn-Ballston corridor, and Pentagon and Crystal Cities at National Landing.

Listed by:
Betsy Twigg
McEnearney Associates
703-967-4391
[email protected]
www.betsytwigg.com

Open Houses in Arlington This Weekend

By ARLnow.com Sponsor

Looking for a home? There are plenty of houses and condos open for viewing this weekend.

Check out the Arlington Realty website for a full list of homes for sale and open houses in Arlington. Here are a few highlights:

3201 Military Road
6 BD/6 BA, 2 half bath single-family home
Agent: KW United
Listed: $3,389,000
Open: Sunday, 1-4 p.m.

 

3911 Lorcom Lane
5 BD/5 BA, 1 half bath single-family home
Agent: Compass
Listed: $2,650,000
Open: Sunday, 1-4 p.m.

 

3179 17th Street N.
5 BD/4 BA, 1 half bath single-family home
Agent: Long & Foster Real Estate
Listed: $2,125,000
Open: Sunday, 1-4 p.m.

 

1807 N. Underwood Street
4 BD/4 BA single-family home
Agent: McEnearney Associates
Listed: $1,350,000
Open: Sunday, 12-3 p.m.

 

1521 23rd Road S.
3 BD/3 BA single-family home
Agent: Long & Foster Real Estate
Listed: $1,095,000
Open: Sunday, 1-4 p.m.

 

1411 Key Blvd, #304
2 BD/2 BA condo
Agent: Long & Foster Real Estate
Listed: $855,000
Open: Saturday, 1-3 p.m.

 

1327 S. Glebe Road
4 BD/3 BA, 1 half bath townhome
Agent: Keller Williams Capital Properties
Listed: $749,900
Open: Sunday, 1-4 p.m.

Just Listed in Arlington

By ARLnow.com Sponsor

Just Listed highlights Arlington properties that just came on the market within the past week. This feature is written and sponsored by Andors Real Estate Group.

Last week I wrote about Easter being a busy week in real estate. While it was true this year, it was slower than surrounding weeks, comparatively speaking.

Plenty of real estate transactions occurred, including abundant “bidding wars,” but the numbers softened by 20% to 30% in some of the key metrics I measure weekly.

We had fewer new listings, fewer ratified contracts, and available inventory increased. It’s too early to tell, but I’m sure this won’t be a lasting trend — demand is simply too high!

Arlington’s small geographic area is largely made up of detached homes, and these homes are the most in demand by a wide margin. We’ve got virtually no new land available for large-scale developments, so this is a matter of scarcity, even if sellers of existing homes decided to list their properties in large numbers.

Developers can certainly go vertical where zoning allows, but there is no shortage of available condominiums to purchase.

I expect land value to continue to increase at a rapid pace in the short- and mid-term, all while the average stock of housing continues to age. Smaller, older homes are on the chopping block as builders continue to work in the upper price brackets, despite the desire of many to call the smaller houses their home. The economics of Arlington real estate has developers continuing to produce a steady stock of new homes for sale, but the prices are multiples above the average resale in Arlington.

Sellers listed 96 homes for sale this past week, down 12 from the week before, while buyers ratified 59 contracts in the same timeframe — 37 fewer than the week prior; 28 of the homes that went under contract were on the market for seven days or less.

This week, there are 427 available properties for sale throughout all of Arlington and across all property types — one more to choose from compared to last week. Of these, 92 are detached homes — making up just 21% of the available inventory. There are 46 townhome/semi-detached homes, and condominiums make up 289 of the available units in Arlington, or 67%.

A quick comparison to last year: For the same week, sellers listed 60 homes and buyers ratified 38 contracts. There were also only 239 available properties for sale this week last year.

The average list price for currently available properties is $808,341 and the median is $575,000. Currently available properties in Arlington have an average of 67 days on market (DOM) and a median of just 35.

Click here to search currently available Arlington real estate. If you see a home you’re interested in purchasing, give us a call.

Call the Andors Real Estate Group today at 703-203-1117 to talk more about buying or selling Arlington real estate. Below are eight new listings I think you might like to check out:

1026 21st Street S.

Boring Title: 6 Surprising Reasons a Title Company and Title Insurance is Important

By ARLnow.com Sponsor

Title insurance is boring, but Allied Title & Escrow is here to decode the jargon and make it (somewhat) more interesting. This biweekly column will explore the mundane (but very necessary!) world of title insurance while sharing interesting stories of two friends’ entrepreneurial careers. 

For many people across Northern Virginia, buying a home is one of the biggest investments they will make in their lifetime. That’s why it is so important to make sure that your investment is protected.

Believe it or not, there are many reasons why title insurance and working with a reputable title company is so important. Here are the most common and unexpected reasons you absolutely need title insurance.

1. Proper Record-Keeping

When you use a title and escrow company to process your sale, this means there is a proper record for who owns the home and land. This helps protect your investment while you own it and when you want to sell it.

2. Avoid Scam Artists

Even in this day and age, there are scam artists that can forge documents and pretend to own a property. These types of people may approach you as not wanting to go through the proper channels to buy a home.

You could find later that they were not the legal owners of a home and therefore you are not the legal owner despite any money exchanged.

3. Undisclosed Estate Issues

Even if a home is not sold directly as a result of an estate sale there could be issues with a will regarding who owns a home. If someone doesn’t have full ownership rights, they can’t sell the home legally. Title insurance can help protect you from undisclosed issues down the road.

4. Fencing or Illegal Building on Your Property

Whether you have a lot of property or a small piece of property, encroachment of fencing or buildings onto your property can be an issue. Just because a building or fence is there does not mean that it was permitted, approved or on the property line. A good title and escrow company can help you understand what you own and what you need to protect.

5. Legal Disputes

Anything from divorce, bankruptcy or disputes regarding payments on renovations can put the title of a house at risk. If you buy a house with outstanding lawsuits or potential lawsuits, you might have legitimate liability as a new buyer if you don’t have title insurance.

6. Mistakes

In any industry errors and omissions can happen. Title insurance protects you from overlooking something regarding your property and its legal ownership.

An example is that it’s possible that an heir was never put on the deed and as a result that person could come back years later saying they own 50% of your property. If you don’t have title insurance you could have to pay the heir out of your own pocket which could be worth hundreds of thousands of dollars.

Whether it is a boundary issue or defects in the title, title insurance can provide you with some peace of mind and help secure your largest investment.

Pro tip: Always choose the enhanced policy over the standard policy when purchasing a single-family home or a newly constructed condo. The enhanced policy protects you against boundary disputes and also increases the policy’s value 10% a year for 5 years. An example is a $1M house would be covered $1.5M within 5 years.

Have questions related to title insurance? Email Latane and Matt at [email protected]. Want to use Allied Title & Escrow when you buy a home? Tell your agent when you buy a house to write in Allied Title & Escrow as your settlement company! 

Just Sold: April 8, 2021

By ARLnow.com Sponsor

We’re a quarter of the way through 2021 — we can’t believe it either — and Arlington’s real estate market shows no signs of slowing down.

This past week, a whopping 96 properties were reported sold across the county, including a $3 million six-bedroom home in Bellevue Forest.

Looking at the big picture, as of April 4, there were 583 homes listed for sale in Arlington, according to Homesnap. This includes 404 condos, 133 detached homes and 46 townhomes.

“The median list price is $575,000 and the median sales price is $625,000,” Homesnap reports. “There have been 198 new listings in the last 4 weeks and 263 sales.”

Here’s a look at a few of the properties sold in the past seven days:

In the market? See properties that have been Just Listed and Just Reduced.

Morning Notes

By ARLnow.com

Call for Public Input in Police Chief Search — “The head of the Arlington branch of the NAACP wants the county government to include more public involvement as it prepares to select a new police chief… Community groups should ‘have the opportunity to participate throughout the entire selection process,’ Spain wrote. ‘Now more than ever, we need openness and transparency, and all candidates should understand the needs of the community.'” [Sun Gazette]

Reminder: Arlies Voting Now Underway — “Voting for the spring 2021 Arlies is now live! The Arlies are ARLnow’s community awards, highlighting Arlington’s favorite local places, people and organizations — as chosen by you.” Each season brings a new group of categories. [ARLnow, SurveyMonkey]

Arlington Homes Selling for Near Ask — “If Arlington homeowners appear to be getting a little too aggressive in setting listing prices for their homes, they are in good company. The same seems to be true for neighboring Alexandria and Falls Church, as well. For the first two months of the year, Arlington home-sellers garnered an average 98.47 percent of listing price.” [Sun Gazette]

Nearby: POTUS Visits Alexandria — “President Joe Biden visited the Neighborhood Health vaccine site at Virginia Theological Seminary today (Tuesday) just before he was scheduled to announce that states should open COVID-19 vaccination appointments to all adults by April 19. ‘We passed 150 million (vaccine doses distributed) yesterday,’ Biden said. ‘When you go home, get all your friends and tell them, ‘Get a shot when they can.”” [ALXnow, Twitter]

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