Earnest Money/Cash at signing

Bird Dogs, Wholesaling
1

Any thoughts on this. I’m dealing with an estate, through the seller’s realtor. It’s not yet listed on MLS, because it’s so bad. We had the entire deal structured, and then the realtor and seller’s attorney wanted 10% down at signing of contract. My strategy is $100 earnest money, rest due as cash at closing. I will assign the contract, and my buyer will bring cash.
Now I think if they are motivated, they will waive the money at closing. If not, no deal.
Has anyone had to deal with this? If so, how? Is the answer just don’t deal with realtors representing sellers?
Thanks,

2

The realtor is the hurdle. The seller probably just wants out, the realtor in the never ending quest to make money wants the rest of the earnest money…
Best advice…if you see a realtor walking in the door with the deal, make sure that the realtor is comfortable with wholesaling and won’t barf on the deal.
If not, don’t waste your time, because they are angling to get the deal for themselves…

I speak as a fmr real estate agent…

3

Thanks for that advice. Just a day later I was able to structure it to pay $100 earnest money, and then balance of cash at closing in 30 days.
The realtor has sent me the binder, which is “a legally binding contract”. No money is due at the signing of a more formal contract. Remaining money to be paid at closing.

Question: do I need any contingencies in my binder, or just the “more formal contract”? My first deal, so I’m hesitant to sign the binder, because I don’t want to risk more than the $100 binder deposit.

Thanks!

4

I generally put in a clause that allows for forefeiture of the earnest money if the deal doesn’t close within 30 to 45 days or that I have not give proper notice of the deal having to be extended beyond the 30 day window.
I do this so that the client will feel at ease that I am working hard to get this done.
I have had several clients that don’t even ask for a contract, it has been all verbal and nothing has gone wrong…

5

Thanks, that’s great that you have had things go smoothly. No doubt your background helps, because you know what the heck you are doing.
The realtor knows I’m going to assign it, he even put “or his assignees” next to my name in the binder. I trust him, but he is working for the seller…and I don’t want to risk any more than the $100 earnest money if I can’t find a buyer for whatever reason…just because this is my first one.
$245k ARV
$120k asking price, inc. my $5000 assignment
$67k rehab costs, approx.
$58k profit

Still confused on how to get a title search prior to closing, and who to do the closing.
Thanks for any info you have!

6

Find a good real estate attorney…email with your city and I might be able to help

7

Thanks, I have my binder in with liquidated damages clause and approval of my attorney clause. Hopefully they’ll accept and we’ll be ready to go.
Here’s a question…if I order the title search and then, for whatever reason, I cannot find a buyer of my contract, what fees will I be left holding the bag for. I assume my attorney’s fees and title search fee.
Thanks,

8

yep that is about it, but you should build your buyer’s list first…

9

Thanks for the help. My offer was accepted…now just ratifying. Believe I put together a real nice one here for a partner. I have a solid buyers list, REIA assoc, and a very good RE Attorney.
thanks for the thoughts!