The Down Payment on a real estate purchase is the difference between the purchase price, and the amount of any loans that you might be taking out to finance the purchase. If you are purchasing a $400k property, for example, and taking out a $320k loan, then you are “putting down” $80k of your own money on the purchase–that $80k is your down payment. Most purchasers in the current market in this area tend to make down payments of between 3.5% and 20% of the purchase price, with a few putting down 0% (there are still a few zero-down options available) and others putting down more than 20%.

The Deposit (also known as the “Earnest Money Deposit” (or “EMD”) or just the “Earnest Money”) is an amount of money that, as part of your offer on a property, you are agreeing to put into escrow–basically, to hand it over to a trusted third party–as an assurance to the seller that you are not going to waste their time with an offer than you don’t intend in good faith to follow through on. If the seller accepts your offer, then your deposit money is held by that third party until the day of settlement, at which point it is given to the seller and credited towards whatever amount you would otherwise have to pay at settlement (i.e. your down payment plus any closing costs or lender prepayments); if the contract doesn’t go to settlement through no fault of the buyer, then the deposit is often (but NOT always) returned to the buyer. (Your agent can explain to you the circumstances when a deposit would or wouldn’t be returned to you, and of course those circumstances are also spelled out in the 20+ pages of contract that you usually sign in this area as part of getting your offer accepted. (You are reading all of those contracts before signing them, right?)) Deposits in the DC area in the current market tend to range between $2k and $15k, but sometimes go much higher; the point of an earnest money deposit, after all, is to convince the seller that if they accept your offer, they will probably get their house sold, so the more money you are willing to put at stake in that deposit, the more convincing the deposit will be.

It’s important to not confuse Deposits with Down Payments, because doing so can really throw off the math for you or anyone working with you. If, for example, you tell your lender that you’re are only putting $5k down on a purchase, but are actually planning on offering a $5k deposit to the seller and putting down $40k as a down payment, your lender will probably end up putting you in completely the wrong loan product for your needs and costing you a lot of money in the long run. Confusion between Down Payments and Deposits can also result in nasty surprises at the settlement table and/or during negotiations with sellers, so make sure to use the right term for the right concept.

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The Ethical Homes WikiMLS Property Search is one of the most advanced search tools available for properties in the Metro DC area, with cutting edge features such as Walkability scoring as well as Wiki-style editability that allows agents to post comments and photos about listings, so that active buyer agents can fill in the gaps that the official listing info might leave.

(If you’re looking in a different area, let us know, and we’d be glad to direct you to sites that focus on those areas.)

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The easiest way to start the process might be to tell us a little about your scenario, including where you are planning on looking.

At some point during the process of helping you to find an agent, we’ll probably also ask you to complete the Ethical Homes Buyer Agent Referral Questionnaire, which will give us a much better idea of what characteristics you value most in the agent that you’ll be working with.

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Heide & Jim were both in the military, and wanted to take advantage of their Veteran’s Administration benefits to get great financing for their purchase, but most lenders said that the property wasn’t eligible for purchase using a VA loan. Ethical Homes knew that the property technically was eligible because of a relatively obscure provision of the VA financing rules, so we went to our stable of literally dozens of wholesale lenders, and were able to find one who would approve the loan under that provision.

DC law doesn’t allow the same person to act as the mortgage broker and real estate agent on the same transaction, and at the time Ethical Homes didn’t have as extensive a network of affiliated agents working in D, so Heide & Jim had to use a different agent to help them with their purchase, who wasn’t familiar with VA loans. Since we are experienced agents as well as mortgage brokers, however, we were able to help their agent navigate the intricacies of the relevant VA financing contract clauses. And when the sellers was balking at accepting Heide & Jim’s offer, their agent asked Ethical Homes to step in and talk to the sellers about why Heide & Jim’s offer made the most sense for both sides. As their agent said to us later:

Thanks for all your help. I just had a good feeling that if she talked to you they would feel better about [the offer].

Ethical Homes came through for Heide & Jim yet again when a VA underwriting issue was going to force them to pay hundreds of dollars extra per year for their homeowner’s insurance; with our thorough knowledge of VA regulations, we were able to step in and show the underwriter why Heide & Jim shouldn’t have to pay the higher amount.

Heide talks about her second experience working with Ethical Homes:

I cannot recommend Sweth and Ethical Homes strongly enough. The education and information we received were invaluable and the customer service tremendous. Sweth and his team helped significantly to make this buying process a positive experience.

And Heide wasn’t joking about how much she recommends Ethical Homes; her raves about our services have led to over a dozen other people contacting us for assistance already!

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As careful consumers, Jill & Amir began researching the home-buying process long before they would be actively on the market. During our initial consultations with them, we helped them make sure that they were on track to eventually make a purchase while also making sure that we understood their motivations for doing so; thus, when they called us a few months later (and a few months before they had originally been planning on starting their search) to say that they had stumbled on a property that they really liked and that they wanted us to help them purchase, we were able to show them how not only was that home not really the best match for what they were looking for, but also how buying something sooner than they had originally planned didn’t really mesh with their long-term goals.

They agreed, and decided to stick with their original timetable; as a result, working with Ethical Homes, they eventually found a property that they were much happier with and that ended up being a much better value for them.

Jill & Amir say:

As first-time homebuyers, we were looking for a real estate agent who was trustworthy, patient, would help us make an informed and balanced decision, and would be our advocate in the negotiation process. We found all of those qualities in Sweth. He was kind enough to meet with us and advise us about the process months before we started our formal house-search. When we later chose him as our real estate agent, both he and [his assistant Kyle] were always available to show us more properties. We never felt pressured into buying and, in fact, on at least one occasion he helped us avoid making a mistake by letting overzealousness cloud our rational judgment. There was a property that we liked during our first day of searching, and Sweth encouraged us to take our time before making an offer. When we returned to the property just a few days later, we found that we were much less excited about it than we originally were. One of Sweth’s greatest strengths is that he will provide you with all the information that you must know and every bit of information that you probably should know. He is honest, experienced, and knows his field thoroughly, and you can always expect straightforward answers to your questions. Finally, when it came to closing Sweth was remarkably helpful. Since we had only a short time between closing and settlement, he was very efficient in moving documents around. He explained to us what we were signing and advised us about negotiation strategies. He even gave us good recommendations for painters and other service providers. In sum, we highly recommend Sweth to anyone looking for a home.

(At Ethical Homes, we’re proud of the great word-of-mouth reputation that we’ve built, and always love to have our past clients refer us to their friends and family; Jill & Amir’s raves about us after their purchase were especially enthusiastic, and we’re happy to report that just three months after Jill & Amir’s purchase, they’ve already led four other buyers to start working with us.)

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We worked closely with Melissa to make sure that we understood her needs completely before she arrived in-country, and were thus able to help her focus her time once she arrived on the properties that were most appropriate for her; during her search, we also gave her the information she needed to quickly evaluate those properties, and once she identified the one that she wanted–a sunny, open condo in the heart of the thriving Penn Quarter–we helped her negotiate a price for it that was nearly $60k below the seller’s initial asking price.

Melissa says:

With Ethical Homes’ help, I managed to select a condo that met all my needs in just one week’s time. Sweth’s dedication to helping me find a place that met my criteria (which, at times, weren’t all that clear, even to me) was never in question. When I wanted more information or had obscure questions, Sweth provided the answers. The real pleasure in the experience was feeling like Sweth was out to get me exactly what would make me happiest, rather than telling me what would be best for me and would be twisting my arm to go with his option. I’m confident in my decision making; Sweth gave me the information I needed so I could make a sound choice. Sweth is detail-oriented and perceptive. He uses these traits to his advantage, and provides the perfect amount of info–he’ll skim over topics if you clearly aren’t interested, but he’ll also research particular issues and get you all the info you need.

She goes on to comment on how much she appreciated the systematic approach that we bring to the process, including how we sent her reminders to do things like change her utilities and forward her mail:

This attention to detail made the process so much easier. The effort put into each step wasn’t just tied to finalizing the transaction.

And she gives one last comment about her new purchase:

P.S. I love my apartment! High ceilings are the best!

Update 2/19/09: Melissa B. was so happy to use our services for her original purchase that when the time came for her to look into refinancing, she contacted us, and we were able to help her reduce her mortgage payments by nearly $350/mo!

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After working with Walt & Diane for a while and going over their needs and wants, we realized that what they were looking for just didn’t exist in their price range in Virginia or DC, but that there were definitely properties that met their needs in suburban Maryland. Even though we didn’t have any Maryland-licensed agents on our team at the time, we felt that helping Walt & Diane find the right property was more important than getting a commission from helping them buy the wrong property, so we suggested that they work with another agent who specialized in the area of Maryland that we thought they should be looking in, and continued to advise them about their mortgage options. Walt & Diane say that they were especially happy with the “personal help in selecting neighborhoods and patience when showing properties” that we showed when working with them directly, and commented that the most representative moment of their experience with Ethical Homes actually came when we stopped helping them directly:

When we made the decision to go to Maryland to buy, Sweth (who is not licensed in MD but should be, hint hint) did not hesitate or drag his feet in setting us up with Vanessa. We were very happy with the service, and would absolutely use Ethical Homes again.

(For buyers in Maryland, don’t worry–we do now have real estate agents in our team who are licensed in that state, and can now also handle Maryland mortgages as well.)

Update 3/15/09: In the time since their initial purchase, we helped Walt & Diane refinance their mortgage on their home, and started advising their daughter, who is considering making her first venture into buying real estate later this year.

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They were coming to the U.S. for nine months of training at the State Department before their next post abroad, and were hoping to purchase a home that would be convenient for them while they were in training but that they could rent out once they went to their next post. Finding a mortgage was going to be difficult, though: Lorena was a Colombian citizen with no credit history in the U.S., Greg had been abroad for so long that he had almost no recent credit history, and both of their incomes would be dropping while they were in training and going back up again once they got to their next post, so the other lenders that Greg & Lorena had spoken with didn’t think that they would be able to make a purchase. Ethical Homes worked with Greg & Lorena before they even got to the U.S. to help them understand their options and the homes that would best fit their needs, and to find a terrific mortgage that gave them a great rate despite their unusual situation. And once they got into town, one of our expert buyer agents was able to find them a home just a block from the State Department facility where they would be in training–after just one day of searching!

Greg & Lorena say:

A friend at the Embassy referred us to Ethical Homes, and we began working with Sweth when we were still several months away from moving back to the United States. With a couple of interviews, he had arranged for an internet search of properties that might interest us, as well as providing a number of very creative financing options for us. This advance planning allowed us to make the best use of our time after we returned. In fact, it only took us one day to find the property we now live in! During the period when we were purchasing the home, Ethical Homes continued to work with us to make sure we understood all of our options, dealing with both the seller and the financing aspects of the purchase. Because of our extended time outside the country, and our plans to leave again this summer, I know that our questions about financing required a lot of creativity. Ethical Homes found a great solution that works extremely well for us, and Sweth stayed on top of our lender to make sure that closing went seamlessly. The most outstanding parts of our experience with Ethical Homes were without a doubt the responsiveness and flexibility we got at every step of the way. From taking quite a lot of time with us at the beginning of the process, when we were not even in the country, to running numbers time and time again to make sure we understood what different changes would mean to us both immediately and down the line, Ethical Homes made us comfortable with our decisions both on the property we picked and on how we financed it. I’d recommend their services strongly.

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Ethical Homes helped them to understand the home buying process, plan out their purchase, and make sure that they were getting the best value for their dollar.

First, we identified another property for them in the same development that was a better fit for their needs, and negotiated a price $10k lower than the developer’s agent had said the developer would even consider. Then we found them a loan program that saved them $200/mo over the loan they were initially considering, while locking in their rate for a longer period; we even kept saving them money at the settlement table, where we found three errors in the settlement documents that would have cost them an extra $2700 in closing costs”mdash;and since they had found the home they wanted to purchase on their own, they were also able to take advantage of our Discovery Discount program, saving them another $2400 at the settlement table!

Alex & Julia say:

Throughout the buying process, Sweth would clearly and simply explain all of the very detailed technical information we would have to understand to proceed with the entire transaction. We were so happy to know that he was wholly invested in making sure we understood these items as well as he did—his explanations of these highly complex aspects of buying a home should be written down in a training manual for all real estate agents to repeat to their clients so every home buyer could be a truly educated one. Sweth would happily offer his professional opinion if we asked for it, but never imposed it upon us in order to expedite a decision. From hearing other persons’ experiences with real estate agents, this is apparently a very rare and almost extinct professional trait. The lines of communication were always wide open with Sweth answering our calls and emails promptly. Conversations with him are pleasant, reassuring and productive. We knew everything that was happening during the whole process and how each item was progressing thanks to Sweth’s unfailing communication. It felt as if we were his only client. We were especially thrilled that he was able to extremely quickly dismantle all the many options found in our mortgage and present them to us in a clear and understandable fashion so that we could all talk openly about which direction to go and which numbers to accept. When eighths of a percent mean thousands of dollars, it was wonderful to know that Sweth went above and beyond his normal role and to make sure we were getting the best deal. He simply did not let us down. When we told friends and family of our experience with Sweth, they were amazed to hear that such a geniunely positive experience could be had with a real estate agent (they mostly tell of horror stories with their agents). We couldn’t have asked for a better experience. We’ll do it all again next time with Sweth, when we sell.

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After discussing Mona’s long-term goals for the home she was hoping to purchase, we showed her why the loan program that her original lender had picked for her didn’t make the most sense for her situation, worked with her to find a lender who had loan programs that more closely matched her needs, and helped her understand all of the options that the new lender offered.

And during Mona’s search, which lasted for nearly 8 months, we actually helped her to find and attempt to purchase two different homes that met her needs, only to have those deals fall apart after flaws with the properties and unethical actions on the part of the selling agents were discovered. Through it all, we made sure that Mona’s interests were fully protected and that she was able to back out of those contracts without having to resort to lawsuits, and then helped her find the third property that she eventually did end up purchasing.

Mona says:

I worked with Sweth Chandramouli of Ethical Homes for more than 8 months to find the right house. I had a limited budget, locality restrictions, and a very definite list of wishes. From day one, Sweth was confident that we would find what I was looking for. I was so appreciative that he never wavered from this confidence, even when mine faltered several times in the 7 months of looking. Sweth is whip-smart, with an amazing attention to detail. I felt lucky to have found a Realtor who was knowledgeable about the housing market, financing pros and cons, and just about everything else. He asked the right questions and never made me feel less when I didn’t. Sweth is trust-worthy and principled and I would be happy to talk to anyone on the fence about hiring him.

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