Earnest Money

good question...I was actually wondering the same thing...10 dollars does legally make it a binding contract, but how do you justify only putting 10 dollars down???I think some people would look at me, or whomever and say yeah right...then again, I could be totally wrong...So def a good question...Especially since things are rolling right now, and only have basically 1 more step before my agent starts throwing offers in...

As an agent, if somone gave me $10 and asked me to remove the property from the market, I would counter back and ask for $1000. With only $10 at risk, there is little incentive for the buyer to perform. As an example, if you had a yard sale, and some one wanted to buy a $500 dining room set, and gave you 50 cents to hold it, would you take them seriously?

Al

I totally agree, Al, but how do you throw down $500 or $1000 with each offer when you're making multiple offers each day/week? What if 3-5 of them get accepted? Is that just a reality that we need at least a few grand seed money to get these offers going and lock up contracts?

THANKS!

Tracey R.

The check does not get cashed unless the offer is accepted. $500 is probably a very small percentage of the purchase price. If you are not able to back up your offers, with earnest money, I don't think your agent or sellers will have any confidence in your ability to perform. If you are able to tie up 3-5 properties at a time, and you are making money on these properties, it should not be long before covering these checks is not a problem. If you can only afford one EM deposit, when you open escrow on your first deal, cancel the other offers that you have out. Once you cash out on your first deal, you will have money to work more than one deal at a time.

Al

That's a good point. I'm still looking for my first "cash out" deal - the ones we have going right now are to buy and hold, so no cash from them until rehab is done and rents are rolling.

Next one might be done via HML, though, so we'll see if we can walk away from the table with some $$ on that one.

Anyone out there that has used Promissary Note for their earnest money?

THANKS!

Tracey

I have seen many people on here and other places only put up a small amount and make the deal happen and make a solid assignment fee. I feel if you present yourself as a professional and the seller is motivated to sell there home in my eyes they would look at the bigger picture . I think if a seller looks at the earnest money too hard they don't want to sell they are not looking at the point of the contract and that is to SELL the home. I am looking to start out this way CBR has made it in this state and so have others here in illinois,,so I just need to find good deals and if they are good ,,as dean has said ,,the money will follow. I am awaiting dean's new book and am going out to look at houses today,,I'll let you guys know how it goes,,later.

On short sales I know some require that $1000 be put down because it shows that you are really interested. They will not even consider an offer with less than that. But I can see their point having to deal with buyers who back out of a deal.

I was once insulted by a Short sale realtor who came back with a penalty clause if my finacing was not in place within 30 days. My realtor was taken aback about it also and we had to laugh about insulting your buyer was not a great thing to do if you wanted to sale a house.

Short sales, more so than any other type, are on a tight time line. Unless everything goes smoothly, the sale can fall out. If the bank agrees on an offer and the buyer does not respond in a timly matter, the house will go to auction. If this happens, everyone looses. The bank, seller, and agent were attempting to avoid this by forcing the hand of the buyer. I don't think that having the buyer obtain financing in 30 days is an unreasonable request. One other point that I would like to make is that the agent is not the one who decided to request the 30 day time period. That was probably the request of the bank. The Agent is just acting as a couduit in the transaction (passing the information on to the buyers agent).

Okay, so on my Oregon standard RE purchase agreement, there was a check box by the earnest money paragraph (where the selling firm acknowledges receiving the money) for cash, check, or promissary note, so we're checking the note.

Still wondering if anyone knows what I do when using "and/or assigns" for all the places I need to initial.

Sent the contingencies and stuff over to my agent. Let's see how fast she can write up the offer, and if she flips over all my custom stuff, LOL!

Thanks!

Tracey

Ok guys let me jump in on this one. I have only ever written ONE (!) and I say that again, ONE check for ernest money and it was in the amount of 500.00. My realtor just copies it and sends it with every deal I make an offer on which can be aa dozen a week.

If they want more than 500.00 they just dont get it and I have yet to run up on a realtor or seller that dropped a deal because I would not write a check fr a thousand dollars.

Just my two cents...

BTW - hi Al, I have missed you

But, Anita, if you had say 3 offers accepted in one week, you would need to come through with $1500 for those, right? Within a few days of the acceptance, I'm guessing?

Tracey

The $1000 was stated in the remarks section on the property listing and that they wanted that plus a letter stating you were good for the amount you said you would but it for. This was about year ago and times have changed and I don't see that much as I once did with the number of short sales.

The 30 days threw me was all as I had never ran into that statement before. They had asked for a letter from my loan officer that I was good for the money which I thought would have shown that my financing was in order. But bringing it up like that which killed the deal I just could not understand. I wanted the house and would have bought it if that statement had not been written is all I am saying.

I am still looking and hope to find aome more deals soon.