Is $500 to low for a deposit?

agents that will work with you out there. After all why should a $500 EMD be so important to anyone unless they were looking to make some money from the deposit themselves? Find yourself another agent, or just increase your EMD check to $1000(just make a copy and give it to her), but still keeping your stipulations in place. Better yet, write a promissory note instead.

First of all any earnest money deposit you put up is not compensation, if you can't get a loan or if the property doesn't pass inspection. You get that money back if you can't get a loan or the property doesn't pass inspection. Make sure your contract has an inspection clause in it, which your does obviously, and a financing clause.

If you want to cause problems for this agent, to make life better for the next investor that comes along, then you should contact the broker/manager and file a complaint against that agent. Forward the email to the manager and express your concerns about the ethics of the real estate company and the people they hire.

In the meantime find a new agent, get a deal done, and make some money!

As everyone else has advise find a excellent Realtor. All an EMD is, is a good faith deposit. Find a Realtor willing to work (partner) with you instead against what you are doing. God Bless with your REI.

thank you all for your support, i'm on my way finding new agent and 1st deal!!

I agree with the above posts. After e-mailing 25 agents, I received one agent who is EXCITED to work with me in this. Here is the reply e-mail I received from her:

Dear Destrie,

Thank you so much for contacting me and giving me this opportunity to work with you! What you are doing sounds very exciting and I'd love to be a part of it! I did take a minute and looked at your website and I really like the fact that you give home owners on the verge of foreclosure information on what they can do, very helpful to a lot of people I'm sure! I have also noticed your signs around Hampton and have been curious as to who you are and what you are doing.

My name is Kathy Stanbrough and I'm the Owner/Broker of Abbott Realty in Hampton. I have been in real estate since January 2000 and just got my Broker's licenses in the fall of 2008. I became the new owner and acting broker for Abbott Realty in June of 2009. Although I'm a "new" Broker that doesn't mean I don't have the experience and expertise of an older Broker. I started as the secretary at Abbott Realty and before the end of 2000 I had my Sales Associate license. Each year I have increased my sales volume for both listings and sold properties. I have basically been doing the Broker's "actions" since then. I was authorized on ALL the previous Broker's accounts including the Trust account. I was preparing settlement statements and doing my own closings within my first couple of years of being licensed. I was above and beyond the typical Sales Associate as my previous Broker had been wanting to retire for years and basically left me to handle the majority of her duties. At first it was annoying but in the long run she did me a huge favor as taking the Broker test was rather easy for me and making the transaction from employee to owner was fairly easy too because I have basically been doing it for years anyway. There are bascially 4 active real estate shops in Hampton. I am the youngest Broker in Hampton, I will be turning 30 this November and all the other Brokers are at least in their 40's or older. I feel this gives me a huge advantage as the majority of them to be stuck in their "old school" ways. I have received numerous compliments on my website as I offer more interior and exterior pictures then any other firms websites. I can communicate through phone, email, text messaging or any other form that is asked of me.

I am NOT scared to present low ball offers, in fact I have been astounded how many of my low ball offers have been accepted. I have gained a investor client through the misfortution of another agent in Hampton that is still currently selling. I had a property for sale and the investor client had looked at it twice with the other agent, but the other agent refused to present his low ball offer. SO the investor called me and I presented his verbal offer. We did negotiate for a day or 2, but the end result was the investor got the property at a very reasonable price and it is currently his best cash flowing property. I have also presented an offer for $60,000 less then the asking price on an acreage that was listed at $120,000, we never did agree on terms on the deal, but I did present the offer even though it made the Seller mad. Basically I have no problem presenting a low ball offer, the worse the Seller can say is no and my Buyer isn't out anything. I currently have properties listed that I encourage people looking at the property to make a low ball offer to get the Seller into reality. I am currently the Freddie Mac and Fannie Mae rep for Franklin County and have just signed up with AmTrust to be their agent for the area also. I am the ONLY agent in Hampton who is able to sell a Hud property

I feel I would be the best agent for the job because I'm young and I'm hungry. I'm a single mother of a 5 year old and I just bought my own business. I have a mortgage, I have a car loan, I have a business loan, the thought of not making it scares the hell out of me and is the best motivation I have, other then my son. I'm hard working and honest, I call things like I see them. I have worked for what I have, I didn't go to college and nothing was handed to me. I have worked in a factory, I have been a waitress, I have been a telemarketer, and I have been a CNA. I don't expect things to be giving to me and was raised knowing that I will have to work for what I want. Both of my parents are hard working people and out of their 4 children, I was the only girl so I know how to hold my own. I am caring and compassionate to people in need, however I don't let my feelings about a situation interfere with my job, it's nothing personal, it's business.

I hope I helped you in making your decision. I would also love the opportunity to meet with you in person so you can see for yourself what kind of person I am and how I conduct my business affairs.

You can reach me at the office at (641) 456-4707, on my cell at (641) 430-3821 or through email.

I look forward to hearing from you!

Sincerely,

Kathy Stanbrough
Owner/Iowa Real Estate Broker
Abbott Realty Inc.
2 - 1st St NW
Hampton, IA 50441
Phone (641) 456-4707
FAX (641) 456-5643
Cell (641) 430-3821
Email: katy@abbottrealty.us
Website: www.abbottrealty.us

----- Original Message -----
From: Destrie Iverson
To: kathy@abbottrealty.us
Sent: Tuesday, October 13, 2009 10:24 AM
Subject: Professional Real Estate Investor Looking For Properties

Hi, my name is Mrs. Destrie Iverson and I am an investor in the local area. Due to the current economic conditions, I have decided to ramp up my existing operations. I not only represent myself, but I also have several investors in and out of the area that I help find, rehab, rent out, and manage properties. Because of the money backing me, I have set the goal to buy 100 hundred properties within the next 12-18 months. Some of these properties I will buy and hold myself, some of them I will sell to other investors and some I will buy, fix up and flip for myself. Regardless of the strategy I use on each property, I need to be very aggressive on the price I pay for the property, especially in the current market. I have not chosen a real estate agent to represent me yet. The agent that I choose cannot be afraid to offend other agents with low offers. The agent I choose also will have to be available at all times. I use several strategies to buy and sell properties quickly, including making verbal offers when permitted. I will also look at a lot of properties, and buy only a few. So an aggressive work schedule will be required. The upside for the agent who gets accepted will be lots of commission. We will close on properties every month. I will pull in the agent on For Sale By Owner deals. At times I will write additional commission into the contract when we ramp up to full speed. All that aside, myself as well as my partner are professionals who expect to work with a professional. I want to make money and I want my agent who I choose to make money as well. Here are the properties that we are looking to by:

Single family homes with at least 3 bedrooms,

1-2 baths at least 1,000 sq. feet.

No mobile homes at this time

No home built before 1950

No vacant ground

Located in a 45 mile radius of Mason City , Iowa

Any ugly house that needs work

Will settle for 2 bedrooms for the right price

If this sounds interesting to you, and you are a aggressive agent that not only looks at immediate income, but also income for the long term. We only work with motivated sellers that want to sell their home today. The agent we choose must be familiar with doing conventional buying and selling as well as creative buying and selling techniques.

Please respond to this e-mail with your name, phone number, and why you would excel in being our agent to represent us.

We Buy Houses - Any Condition - Any Situation
Ken and Destrie Iverson
KDI Investments
Phone: 641-530-5187
Website: http://kdirealtygroup.buyforeclosing.com
Ask us about our referral program.

That's great Destrie!

Thanks for sharing with us!

Rob

Just out of curiosity, how did you identify which 25 agents you sent your email to? Did you do it randomly or google for realtors in your local area?

Thx,

Rob

I went to all the ones in my area that had a e-mail addy.

Destrie

Would it be possible to place the Earnest Money Deposit (EMD) into the contract as a promissory note payable at closing?

Yes, you can use a promissory note as EMD.

KimmyJ
Press on...

Thanks for the post. Im just copying your ideas if you dont mind. Thanks again.

A seller or an agent representing a seller would be ill-advised to accept earnest money at closing. Earnest money is up front money to protect the seller in case the buyer does not perform as laid out in the contract. The seller will be taking the property off the market and their only compensation for doing this, if the buyer does not comply with the language of the contract, is the earnest money.

Al

Thank you very much AL for clarifying the use of the EMD, it's just one more thing to learn and correctly apply in investing. It sort of seems like an insurance policy or compensation for the seller in case his hard work goes out the window.

If you're trying to avoid putting down the EMD due to shortage of cash, you can write in the contract 1/2 due now and the rest due at the end of inspection period. The seller is still getting their EMD in a timely manner, but it allows you at least an extra 10 days before putting down the entire amount. In those 10 days you should have your end buyer in place and they can put down the rest of the EMD.

KimmyJ
Press on...

lets say you agree with the seller to have an EMD of 1,000 dollars due 10 days after contract acceptance, giving ample time to match up buyer, do you still have to give the seller like 100 dollars or something, or is it possible to buy with NO money down, not even a single dollar? or does it all depend on the seller. cause lets say the deal doesn't go through for whatever reason, i'd hate to lose my 100 bucks .

Those of you who are just beginning RE .....I know that even a small amount like $100 can seem like a million if you don't have it....may I suggest you work first with FSBO's.

When I first started I gave zero earnest money. They never had a problem with it...not one of them. All they wanted was for me to buy their house.
I still work with FSBO's and give zero with no problem from the owner or the title company or anyone.

I go meet the owner and first thing you have to do is make a friend...then buy/sell their house for them. You are there to help them and solve their house problem and they love you! You are their answer to their problem. In todays market there are so so many FSBO's that have been sitting vacant for a long time and the owner will do most anything you ask to get rid of the house.

When you get a few houses under you belt and have some earnest money built up...then work with realtors and give the earnest money.
Just my .02 cents!
Sissy

I'm locking up a FSBO on contract today and I'm going it pretty much solo. I need to know where exactly in the contract below would I put "and or, assigns"?

Thanks everyone!

Agreement to Purchase
This is a legally binding contract. If you do not understand this
contract, please seek legal counsel.
THIS AGREEMENT entered into on the _____ day of _________, 20____ by and
between,
______________________________ or his/her/their assignee(s), hereinafter
referred to as "Buyer", and __________________________________,
Hereinafter referred to as "Seller".
PROPERTY PURCHASED: In consideration of the mutual promises herein
contained, the Seller agrees to sell, and the Buyer agrees to buy, in
accordance with the terms and conditions of this Agreement, the
following described Real Property, Situated in the City of
_______________________, the County of ______________ and the State of
____________, and described as follows:
_______________________________________________________________________________.
Together with all the improvements thereon, all privileges,
appurtenances, easements, and all fixtures presently situated in said
building, including, but not by way of limitation: all heating and air
conditioning equipment including window units; all electrical, plumbing
and bathroom fixtures; water softeners; shades; venetian blinds;
awnings; curtains, draperies, & traverse rods; storm windows & doors;
window & door screens; affixed mirrors; wall to wall, stair, and similar
attached floor covering and carpets; television aerials, and rotor
operating boxes; garage door openers and similar operating devices;
ranges, ovens, refrigerators, dishwashers, garbage disposal, trash
compactors, humidifiers; washing machines; dryer; all affixed or
built-in furniture and fixtures; all landscaping, trees and shrubs; all
utility/storage buildings or sheds; all building and yard maintenance
equipment and tools; all furniture and equipment used by or rented to
the tenants; except:
________________________________________________________________________________
________________________________________________________________________________
In addition to the above the following shall be included in the sale:
________________________________________________________________________________
________________________________________________________________________________
PRICE AND TERMS: Buyer hereby agrees to pay for said property the sum
fifty-five thousand Dollars ($55,000) payable as follows:
A promissory note in the amount of one hundred Dollars
($100) is attached hereto as "Earnest Money" to apply toward
the purchase price. In the event the offer is not accepted or if
Seller defaults in the performance of this contract or if Buyer
terminates this contract as hereafter provided, the Earnest Money
shall be promptly returned to Buyer.

Amount Due Monthly Payment Years Remain Balloon If Any Interest
Rate Tax/Ins Account
A.
B.
EVIDENCE OF TITLE: in the form of a title search and owner's policy of
title insurance, will be furnished by Seller, and shall be subject to
the approval of the Buyer. A preliminary binder shall be provided to
Buyer, for his review and approval, 48 hours prior to closing.
SELLER'S CERTIFICATION: Seller certifies to Buyer that, to the best of
Seller's knowledge (a) there is no termite damage to the REAL ESTATE;
(b) the fireplaces, chimneys, electrical, plumbing, heating, air
conditioning equipment and systems, and other items included herein will
be operational on Possession; (c) the REAL ESTATE is zoned ___________;
(d) there are no pending orders or ordinances or resolutions that have
been enacted authorizing work or improvements for which the REAL ESTATE
may be assessed; and (e) no City, County or State orders have been
served upon him requiring work to be done or improvements to be made
which have not been performed.
INSPECTION: Seller agrees to give Buyer, and/or his agent, access to
property prior to closing to inspect the entire premises. Inspection
shall include every room, the roof, plumbing, wiring, structure,
foundation and all mechanical components. Should any deficiencies be
found, the Seller shall have the option of either repairing the
deficiency, deducting the cost of the repair from the down payment, or
notifying the Buyer that the Seller cannot meet the terms of this
contract and refunding the Earnest Money deposited by the Buyer. Before
closing the Seller shall furnish and pay for: (a) an inspection by a
licensed exterminator stating premises to be free of infestation or
damage by wood destroying insects (infestation and resulting structural
damage shall be treated and repaired at Seller's expense)
CONVEYANCE AND CLOSING: Within _____________ days from acceptance, or
upon repair of any deficiency in building condition by Seller, as
provided above, or within 5 days of receipt of assumption materials from
seller's lending institution by closing agent, whichever is later, both
parties shall deposit with the authorized escrow holder, selected by the
Buyer, all funds and instruments necessary to complete the sale in
accordance with the terms hereof. Seller shall be responsible for
transfer taxes, deed(s) preparation; and shall convey marketable title
to the REAL ESTATE by deed of general warranty in fee simple absolute,
with release of dower, on or before __________________, or at such
sooner time as mutually agreeable to the parties hereto, free, clear and
unencumbered as of Closing, except restrictions and easements of record
which do not adversely affect the use of the REAL ESTATE, except
_______________ and except the following assessments (certified or
otherwise)
Seller shall have the right to remove any and all encumbrances or liens
at the Closing out of the Purchase Price. Possession shall be given
subject to tenants' rights on or before _____________________ 20____.
PRORATIONS: There shall be prorated between Seller and Buyer as of
Closing all (a) real estate taxes and installments of assessments as
shown on the latest available tax duplicate; (b) interest on
encumbrances assumed by Buyer and (c) rents and operating expenses; with
Buyer assuming liability for such items following Closing. Security
and/or damage deposits, advance rentals or considerations involving
future lease credits held by Seller shall be transferred to Buyer at
Closing without proration.
CONDITION OF IMPROVEMENTS: Seller agrees that on Possession, the REAL
ESTATE shall be in the same condition as it is on the date of this
Purchase Offer, except for ordinary wear and tear. In case the REAL
ESTATE herein referred to is destroyed wholly or partially by fire or
other casualty, Buyer shall have the option for 10 days thereafter of
proceeding with the terms of this contract, with an agreed adjustment in
the sale price, or of terminating this agreement and being repaid all
amounts paid hereunder.
DEFAULT: It is expressly agreed that upon the event of any default or
failure on the part of the Buyer, to comply with the terms and
conditions of this contract, that Seller agrees to accept the EARNEST
MONEY deposit with payment of the personal note as full liquidated
damages. Upon default by the Seller to perform under this agreement, all
deposits and notes shall be returned to Buyer on demand, and Buyer shall
not thereby waive any right or remedy he may have because of such
refusal. Further, Buyer shall be reimbursed by the Seller for his
reasonable expense of building inspection, credit report, and appraisal
fees.
SOLE CONTRACT: The parties agree that this Agreement to Purchase
constitutes their entire agreement and that no oral or implied agreement
exists. Any amendments to this Contract shall be made in writing, signed
by all parties and copies shall be attached to all copies of the
original Purchase Contract. The terms and conditions of this Contract
are to apply to and bind and inure to the benefit of the heirs,
executors, administrators, successors, and assigns of the respective
parties. All provisions of this contract shall survive the closing. All
parties are advised to seek competent advice, unless they fully
understand all terms of the contract. Should there be any term or
condition in this contract that is not in accord with the applicable
legal statutes, either party may void that portion of the contract by
having his lawyer furnish a written opinion stating the reason, and
citing the proper law or court case.
LEAD WARNING STATEMENT: Every Buyer of any interest in residential real
property on which a residential dwelling unit was built prior to 1978 is
notified that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. If the dwelling unit was built prior to 1978, Buyer has the
right to inspect for lead, at Buyer's cost, for a minimum of ten (10)
days following Contract acceptance.
EXPIRATION: This offer shall expire unless a copy hereof with Seller's
written acceptance is delivered to Buyer or his Agent on or before
________________________ (AM/PM/NOON/MIDNIGHT) on
_____________________________ 20____.
APPROVAL: The undersigned Buyer(s) has read, fully understands and
approves the foregoing offer and acknowledges possession of a signed
copy.
______________________________________________
Witness
______________________________________________
Buyer
______________________________________________
Witness
______________________________________________
Buyer
Date: __________________
Time:________________________________________________________
Buyer's Address:
ACCEPTANCE
The undersigned Seller(s) has read, fully understands and verifies the
above information as being correct and accepts the foregoing offer;
agreeing to sell the herein described property on the terms and conditions
herein specified and acknowledges receipt of a signed copy.
______________________________________________
Witness
______________________________________________
Seller
______________________________________________
Witness
______________________________________________
Seller
Date: __________________
Time:________________________________________________________
Seller's Address

is already there in the contract (see bolded section).

dantheman24 wrote:

lets say you agree with the seller to have an EMD of 1,000 dollars due 10 days after contract acceptance, giving ample time to match up buyer, do you still have to give the seller like 100 dollars or something, or is it possible to buy with NO money down, not even a single dollar? or does it all depend on the seller. cause lets say the deal doesn't go through for whatever reason, i hate to lose my 100 bucks .

I have never tried this, but it might work. If you put an amount into the contract for earnest money, and allow the seller to continue to market the property until you provide the the earnest money, the seller would have nothing at risk. Then when you find a buyer, have them put up the earnest money to lock up the purchase. You are taking some risk that the seller will find another buyer before you are able to provide the money, but you would not need to go into your pocket.

Al

Thanks....I wasn't sure if that was it, or if I would've had to insert one of my own somewhere. Thanks again for pointing that out to me though.

alchristmann wrote:

dantheman24 wrote:

lets say you agree with the seller to have an EMD of 1,000 dollars due 10 days after contract acceptance, giving ample time to match up buyer, do you still have to give the seller like 100 dollars or something, or is it possible to buy with NO money down, not even a single dollar? or does it all depend on the seller. cause lets say the deal doesn't go through for whatever reason, i hate to lose my 100 bucks .

I have never tried this, but it might work. If you put an amount into the contract for earnest money, and allow the seller to continue to market the property until you provide the the earnest money, the seller would have nothing at risk. Then when you find a buyer, have them put up the earnest money to lock up the purchase. You are taking some risk that the seller will find another buyer before you are able to provide the money, but you would not need to go into your pocket.

Al

I dont think the seller can market the property because I have a contract with him/her and this is assuming he accepts the term "earnest money/initial deposit due within 10 days or this contract is null and void".

Make the "continue to market" stipulation part of your offer. If the seller accepts the offer, this becomes part of the contract. I have had agreements with buyers that allowed me to continue to market a property until they cleared a contingency.

Al

Ask one of your cash buyers (who you are assigning the property to) put down the earnest money? I would think they wouldn't want to miss a good deal and would be willing to do this. I've never done a deal so maybe there is something I'm missing.

There are so many good suggestions/ideas on this thread that give so many different options - I've added it to my favorites.

Lea
SPR Property Solutions, LLC

Find another realtor that is willing to work with you and make the offers. I know of some people that put up $10, yes, 10bucks in earnest money on deals. Your current realtor might not understand what you are trying to do. I'd go searching for a better realtor, clearly explain to them what your goals are and what you have in mind. You will find a good one, just do some searching.

Jeremy

Until you have an accepted offer from the seller, you do not have anything to sell to your end buyer. The earnest money is normally due when the offer is accepted. This would not give you time to work out a deal with your end buyer and get the money from them.

Al

I'm sorry to go off-topic here, but I really need a quick answer to a very important question regarding a promissory note. Sorry for rudely interrupting the current topic, but it seems as though noone ever responds to any of my posts for some reason or the other.I'd like to arrange it so that I give absolutely no monies whatsoever to the seller as well as to get rid of the interest clause in this template that I intend to use.
PROMISSORY NOTE

$______________ Dated_____________
Principal Amount State of: lemoyne, Pa

In installments as herein stated, for value receive, we jointly and severally, promise to pay ________________________________________________, Husband and wife, or order, at ____________________________________________, the sum of ________________________, with interest from _______________________________
on unpaid principal at the rate of __________%( ) per cent per annum, interest payable in installments of __________________ or more on the _____ day of each ____________ , beginning on the ______ day of ________________ and continuing until ___________________ at which time all principal and accrued interest shall be due and payable in full.

This note may be prepaid in whole or in part at any time without penalty.

In the event of sale, alienation or conveyance of all or any portion of the property described in the mortgage securing this note, whether voluntary or involuntary and irrespective of the maturity dates expressed herein, and indebtedness or obligation hereunder, at the option of the holder, shall immediately become due and payable.

Should the holder of the note, for reason, wish to take payment in full or in part of this note, in advance of the maturity date, they may do so with forty-five days advance notice to the parties, herein, without payment or penalty.

Should default be made in payment of any installment of principal or interest when due the whole sum of principal and interest shall, at the option of the holder of this note, become immediately due. Principal and interest payable in lawful money of the United States. If action be instituted on this note we promise to pay such sum as the Court may fix as attorney fee. This note is secured by a Promise to Pay and will be amended and secured by a property, to be determined within (90) days.

Go ahead and use the promissory note for your earnest money. Put escape clauses in your offer. If your offer is accepted, you will have a preset amount of time to excercise your inspections or whatever escape clauses you have put in. If you do not find a buyer for the property, then withdraw your offer as set up in the contract (escape clause). Your earnest money (promissory note) will be returned and and you owe nothing. If you do not follow the language of the contract, then the seller would have claim to the earnest money (promissory note) and you would need to pay them as set up in the note. Do what you agree to do in the contract and it won't cost you a dime.

Al

Hello Al,

Did you get my PM? I wanted to ask you a question that didn't particularly coincide with this topic and didn't want to take the thread off track.

Thanks,

Rob

o ok. would i have to put that in writing as well? i just don't want my end buyer to go around my back and buy the property himself.

Yes you would need to make it part of the written contract with the seller (to protect the seller). Tell the end buyer that you have a contract that you want to assign for a set price. The end buyer will see the marketing agreement, and could go around you. You are taking additional risk because you are not able to come up with the money yourself. If your buyer does go around you, I don't think this is a buyer you would want to do deals with. You may be able to put the "continue to market" agreement in an addendum to the contract, which you would not need to show to the end buyer because that addendum does not affect them.

Al