Too Much Earnest Money

If you have a buyer paying all cash or if you are buying all cash and dont need financing you dont need a 10k deposit valued at that price...what he is referring to is a down payment on the property if there is financing involved....if you are trying to wholesale it at cash value then a $500 deposit is feasible. Maybe even 100....but tell your agent he doesnt need a 10k emd because you are buying all cash with no financing involved, then he may be able to see your view...if he insists, then you need to dump him and the deal....because i dont know what kind of person will pay 10k for that type of amount thats not even THAT serious anyway unless they are making a downpayment.

1st of all a short sale is not bank owned; make a copy of the $ 10,000 check if that's all they want since it could take, 3, 6, or even 9 months to close the original contract will expire(easy out).
Most banks want POF even for short sales; we made an original offer back in March, the bank countered, we countered & now the owner is kicking in the difference between our offer & what the bank will accept. The bank asked for POF in March, & now again this week since we will close on Monday.

Your AGENT is requesting this?

Earnest Money is NOT a deposit. It is put into an escrow account, and neither the buyer or seller can touch it after that, until the deal closes or you use a contingency clause to back out.

Here are some guidelines:
For FSBO: Always try to put $1, but don't go over $100 EM.
For REO: Try to get it as low as you can, but don't go over $1,000 EM.

The more money you have out there, the less you are able to spend on your business. So always get as low of EM as possible.

You should be going after desperate properties, where the seller doesn't have an option to sit there and wonder if you're serious or not, they NEED out! And you're the person who's going to help them.

You might need to take some time to see if your Realtor is the right person to be working with, it doesn't seem like they have the right mindset for what you're trying to do.

Also think of this, if you put a $10,000 EM check on the deal and plan to wholesale/assign it for $5,000. You'll actually lose $5,000 because that $10,000 is given to the end buyer. The only way to make money with high EM is to do a double closing.

If the Realtor is telling you what EM to put, they are probably in violation of the rules, it's not THEIR money to use.

Also, you only put out EM when offers get accepted, so why do they need the check now?

I wouldn't spend too much time on short sales if you're new to this. You need to find a deal that will give you proof of concept, and a short sale won't give you that!

Greg,

that is the Cali re agent mentality!

it seems a bit high though, usually they ask for a couple thousand dlls... but then I've seen them ask for 5%!

I wouldn't worry too much about it though, because it is a short sale, and those can take months! Also, you're only providing a copy of a check, not the original. If your offer gets accepted, then you will need to provide the EM for escrow; at that time you can trade your copy for your buyers check, and if your buyer is willing to put up the 10K, he is most likely a serious buyer!

Wishing you success,