Real Estate Investing Forums

Real Estate Investing => Bird Dogs, Wholesaling => Topic started by: chrisfrmphx on October 24, 2009, 08:48:07 pm

Title: earnest money question
Post by: chrisfrmphx on October 24, 2009, 08:48:07 pm
My question is when it comes time to put a property under contract is it legal to give the seller a $10 bill as earnest money and have them sign off on it or do you need a check or money order to send to the title company? Thanks
Title: Re: earnest money question
Post by: REITVShow on October 24, 2009, 08:57:09 pm
Perfectly legal to give the seller cash. I would not give them any more cash the $10 unless I was getting the deed though
Title: Re: earnest money question
Post by: chrisfrmphx on October 25, 2009, 02:05:59 pm
Do you just put " $10 cash given to seller at time of signing" will this work if not what is the correct way?. Thanks
Title: Re: earnest money question
Post by: aaronwilliams123456 on October 26, 2009, 09:06:09 pm
You give the seller $10 cash when you sign a purchase and sale agreement with them. It's perfectly legal.

The way I do it; is to have the seller sign the purchase and sale agreement and then I say "Hold this". And that's all. I've never had a seller question my deposit unless there was a Realtor involved or an attorney. In those cases I would have to give at least a $500 deposit. You'll be fine. If a seller is really motivated they won't care what the deposit is.
Title: Re: earnest money question
Post by: ericmedem on October 27, 2009, 09:47:51 am
Better yet....

Write:

"Earnest money due upon release of inspection contingency"

This will work with 99% of sellers other than banks...

Why will it work?

Because according to your inspection contingency you're earnest money will be refunded if you are unhappy with the way the inspections turned out anyway....so it's pretty easy to sell this idea.

Time for a small gripe....With 10,000 guru's out they're promoting "The greatest ever" courses...Why doesn't anyone know this stuff....Sorry, I feel better know.

Good luck

Title: Re: earnest money question
Post by: KennyRushing on October 27, 2009, 02:36:05 pm
My question is when it comes time to put a property under contract is it legal to give the seller a $10 bill as earnest money and have them sign off on it or do you need a check or money order to send to the title company? Thanks

 I don't recommend ever giving the seller cash...even if its just $10. Don't practice that. If the deal goes south, you're pretty much out of your money. Put in the contract that the deposit/earnest money will be held in escrow at _________ Title Company and it will be applied to the purchase price (your offer) and the balance will be paid at closing.

I have NEVER ran into a problem where the seller has a issue with this.

I'll also give you another freebie for today since I'm new to the forums...

When you contract the property and you found a buyer...ALWAYS ask your buyer for a bigger deposit than what you put down on the property. That way if for some reason they back out at the last minute and cause you to lose the deal, at least it wasn't a total loss for you. Let's say you did put down $10 and you asked you buyer for $1000 and the deal fell through. Well you're now $990 richer IF you put the right clauses in your contract to protect that deposit you got from your buyer.

Additionally, you can also add clauses in the contract where you don't lose the $10 deposit either.

Kenny Rushing
Title: Re: earnest money question
Post by: Mr Investor on October 27, 2009, 03:08:56 pm
Wow Kenny Rushing is here good to see a famous investor here on the forums.
Title: Re: earnest money question
Post by: hassansr on October 27, 2009, 11:05:00 pm
you can also use a promissary note, due at closing. your attorney will net it from proceeds of sale