Earnest Money

Hey Anne,
you are off, just a little bit. The seller gets the earnest money at closing, but you pay it at acceptance of the offer. That money stays in escrow until closing.
Thomas

Thomas,

I think Anne wants to not pay any earnest until after inspection period. Thus giving her time to find a buyer and then use his money to cover earnest. This is a deal by deal thing. Some individual sellers may allow this(usually not) but on REOs and short sales you usually have 24 to 48 hours to provide earnest.
Your agent can write the offer with whatever contingency you want, does not mean it will be accepted.

Good luck Anne,

Michael

Thanks. Where I was going with that is that I want my cash buyer to come up with it. I want to secure the property but I don't want to use any of my cash. So I was thinking I can use a promissory note. But I don't know what to say, etc. I would have my cash buyer pay it within 7 days of acceptance of offer.

Thanks

You can try using a promissory note but it might not work all the time.
Back in the day we used to do promissory notes all the time but when the market crashed they stopped allowing it.
You can still do it with For sale by owners but when you are making offers with agent involved then they wont go for it.

I worked with a student that did this & it worked
do understand everything is negotiable in real estate contract & this is something that can be accepted or rejected like anything else
but I've had students pay earnest money in the form of a post dated check, and the post date was the last day of the inspection period. So basically the monies were not paid until that date & if it didn't pass your inspection & you end up terminating the contract, no earnest money was ever paid.]
Make sense?

So if I understand correctly, you can't purchase property unless you have earnest money?

For some people who are just starting and don't have any money at all that seems to mean that until you have earnest money to present at the time of signing a purchase contract don't try looking for a deal without it.

What if you don't have Earnest Money, Then what do you do move on to the
next property or what.

Depends on the seller and what agreement they make with you.
The example I gave in my last comment is a technique of getting properties in contract where you pay zero but again, it would require the seller to agreeing to accepting earnest money as a post dated check and ultimatily finding a buyer in that time to come in and pay it.
So if you agreed to pay them $500 earnest, have your buyer pay you AT LEAST non-refundable 1k (twice what you agreed to pay for earnest) so when the date on the check catches up to you, they deposit the $500 but we already made $500 because our buyer paid us 1k up front

This is why it is better to look for FSBOs rather than MLS listings. Much more often you can get by with putting is $10 as EMD with FSBOs.

Karen

It's been said to me by other investors that with mls properties once you get an offer accepted that's when you fire off and find a buyer asap within the 48hour period to get a buyer. Maybe you can get an agent to even stretch it out to a 3day emd period for more time.

Im trying to do this myself for even if I did have $1000 to my name just for earnest money, I still couldn't afford the loss in case I couldn't find a buyer period! So until that first deal we have to be very creative. It honestly gets frustrating because if I had an extra $3,000 it'd save so much time and sleep!

I like that Strategy!! Well Explained!!

Adam,

Being Creative in Real Estate, especially when first starting out is the Key to Success!! Don't get frustrated, keep your head up, and pursue without fear!! Don't intend to use every last dollar for EMD! If you lock up a great deal and have a few solid buyers in line you'll have no problem assigning the contract. You can also partner up with someone on your first few deals to build up some capital!

Good Luck!!
Justin-

Thanks to all of youse .

I I have a contract to purchase a 5bd/5ba home that appraises at 350-400 1m buying it for 186000 I need someone to gift me the cash for emd and I write you into contract to pay you back at closing plus 2% of sales price would anyone be interested? Right now im asking for an inspection contigency until I raise it or partner to get it that way !! Can I create a promissory note to be paid at end of inspection period? I need money fro inspection or can I ask seller to pay right now this banker is saying they will not even turn on utilities to perform an inspection. I need a Mentor who can help me right away. Please

patrice

Anne,

What I do is I put in my contract that I will pay earnest money after 72 hours of acceptance of offer thereby giving me time to sell this to my buyers. You have to have a strong buyers list though, I would not recommend making offers unless you have at least 5-10 buyers who want the same thing in the same areas.

The reason is you could really struggle to wholesale that deal and maybe not sell it because you run out of time and have to back out of the deal or make your agent look bad because you didn't come up with the money for emd, earnest money deposit, I know because it happened to me. You CAN DO THIS NO MONEY DOWN! But you have to follow the instructions in Deans 30 Day's to RE Cash, there are no short cuts, you have to follow that & rule #1 is building your buyers list, then go make offers then when you get one accepted you wont sweat it about the emd because you have a solid buyers list. I have done 5 deals btw so I can speak to this question.

And Michael you are absolutely right, always love to read your comments, let's do dinner Sat night at the Edge ok? God bless.

Try being a little more clearer on your question, I understand the first part but not that you need the seller to pay right now? Pay what? And to be paid at the end of the inspection period?

Where is this deal?

Using a promissory note for your EMD is totally legal and it is done all the time. Although it is more common with a FSBO property you can negotiate things like this. But with a property on the MLS it would be difficult because the sellers area being coached by real estate agents and they don't like seeing creative things like that so they would advise the seller against it.

You can also just use $1 for EMD as well. then if you back out, you lose $1 big whoop! that is what I do when I'm working with a FSBO then I dont worry about the seller not doing a promissory note.