EARNEST MONEY

Hello,

First nice job on getting your buyers and finding your properties. For the Earnest money what I have been doing is giving a copy of the check to my agent (not the original) and I have it written in my Purchase and Sale contract that the earnest money is to be deposited 3 days after my inspection contingency or at closing. This way no money is due upfront (they can't cash a copy of a check) and when I get a buyer that wants the property, after his inspection and everything else is done to his satisfaction, I will have them give me the earnest money to cover my check. This way no money is out of our pocket, just the buyers, and you have time to deposit his earnest money to cover your check. Then continue as planned. The earnest money has not been an issue.

There are many other posts on this site in regards to Earnest Money. Check them out because a lot of people don't even put any down. That is the safest way. The way I have been doing it hasn't cost me a penny. Just make sure that you have an exit strategy (i.e. inspection clause) in case you can't assign it you can back out of the deal during your time period, and all earnest money reverts back to buyer (you). Good luck and I can't wait to hear about your first deal.

Richard
Bothell, WA

Richard you are a godsend. Alot of people don't understand how much the people on this site have helped and motivated me. GOD BLESS

You are more than welcome. Believe me when I say that I agree with you 100%! The people here are fantastic and they are only here to help. It's karma. What goes around comes around. Good luck and let me know how these deals went. Experience is the best teacher so please share. Best of luck!

Richard,
Bothell, WA

Hi David, I just write in the contract that I will put $100 to be submitted to my Title Company followed by the name of the TC that me and my business partner already contacted. But the truth is, of all the contracts/offers that I have submitted and accepted so far by the seller, none of them really demanded to show them the $100. No money did I ever paid to any seller representing EMD nor submitted to the title company. If they demand for it, I will show them just the Photo copy of the check. Blessings to all. LA

People don't understand when you just stop thinking about it and do it it will just happen. you have been a great help

I have done deals where I told the seller I didn't want to put earnest money down, and they still gave me a contract with a provision that they could still sell it to someone else at any time. This gave me a free shot at getting it done, and didn't cost me a dime.

That sounds like a great idea. I am going to have to try that. It is just easier with even less risk involved. Thank you for the input there coach.

Richard
Bothell, WA

I just want to thank everyone for the feedback.

WoW! Congratulations. For my personal home I have put down 5K. My realtor says that it shows how serious I am about purchasing it. Now I looking for partners to complete the deal. Best of Luck.

I am not an attorney and am not giving legal advice. It is the law in every state and jurisdiction that in order for any contract to be considered legally binding, there needs to be consideration included, which is monies.

If you are dealing with properties being listed and sold by a licensed realtor, then they will demand that earnest money be included with a contract, atleast most will, and those realtors who deal with investment properties only, usually will allow you to set your own terms for earnest money. Traditional realtors, those being one's who don't specialize in investment property exclusively, will often demand earnest money in the amount of 1% of the purchase price. They will tell you that this amount protects the seller in the event that you back out of the deal.

Now as a investor, if you had $500.00 to $2500.00 in earnest money tied up and you couldn't buy or just decided not to buy and you did not have clauses in the contract to protect you, thats a huge loss of monies.

If you are dealing with properties being sold as a FSBO, they will not hold you to any certain amount of earnest money. You could pay $50.00 and write in the offer that you will deposit it with the title company or closing attorney and go down to the title company yourself and deposit it and the title agent would never say a word to you, just hand you a receipt.

Hope this helps.

I just made my first two offers today and all the agent asked is how much I wanted to put down as earnest money, on the form only. He didn't ask for a check, just stated he had to put an amount on the form. I put $1000 for each one and I have contingencies on inspection which I will flesh out in the P&S if I get to that point. So right now I am out absolutely nothing and will use that copy of check idea when and if I get to the next step.

Kristin

I think using the clause "earnest money submitted upon acceptance of contract" is good, but has anyone used it by pairing it with a promissory note?

Promissory Note

Earnest money in the amount of $_________.00 in the form of a Promissory Note to be paid at closing. In the event that this transaction is not concluded successfully by me or another buyer, no earnest money will be paid to the Seller.

_________________________________________ _________________________
Buyer Signature Date
_________________________________________ _________________________
Seller Signature Date

Hello Jeff, Can I ask how much is the Coaching program and how long is it ? Its something I've been thinking about for a while.
Rick

There are many creative ways of getting around putting up Earnest money as already listed on this thread. I was in a Real Estate Investing seminar a couple of weeks ago and this same questions was asked to the instructor and his answer was, what investor wants to give away thousands? He personally does not offer more than $100 which is refundable if the deal does not work. However, if you must, his 1st suggestion was that if you own a house transfer the title to an LLC that you have created and use the money you have in your escrow account. As already suggested place the money in an escrow account at a Title company where them money can be verified by hundreds of people. He also told us to keep in mind that the seller is not the one who is demanding the earnest money it is the Realtor. All the seller wants to do is sell their house that's it.

I have placed several offers in with $100 earnest money and had only one owner counter back requesting $200, still waiting to he back on my counter to their counter. The others countered on my purchase price that's it! Sad to say that no one has accepted my purchase prices, I had one Realtor tell me that they were way to low, she didn't last. As my instructor told me, if you are not embarrassed by your offer price then you are offering too much.