I really dont like to tie up my money, but if I make multiple offers on multiple properties with agents, the earnest money is a real hassle. Then if the offer isn’t even accepted I know I get the money back, but it just sucks having it on hold when an acceptance can take up to a few months. Is there any way I can have this postponed until I have a valid offer accepted.
I finance primarily with hard money (75%on a subject-to apprasial) then refi @ 80% of final appraisal when rehab is done.
Thanks
Earnest $ is b/w the buyer & the seller. It’s the real estate agents that require large amounts of earnest $, i.e 1% min. And who could blame them? If I’m selling, I’d want the most in earnest $ too. If you’re dealing w/ motivated sellers, they don’t care how much you give them for earnest $. Just solve their problem.
So I learned a very important lesson today…AGENTS DON’T CASH YOUR CHECK UNTIL THE OFFER IS ACCEPTED!! This means you can put as many offers as you want and the only money spent is on the paper your check is written on. I am very sorry for wasting precious moments of everyones time who read this post.
thanks again
rmart81
Actually earnest money is legally considered consideration and is not required to form a contract. RE agents & sellers want to see some earnest money because it means that you are earnest - but it is not really required. Real estate agents do not cash checks. They either put them into a trust account or send them to an escrow company, but only after agreement has been reached the buyer and seller. The real problem with making multiple offers is what do you do if more than one is accepted. You have legally entered into a binding contract with a seller and are obligated to perform.
If the Seller is motivated, they really don’t care how much the earnest $ is. That’s why I don’t typically offer > $10. I also provide a proof of funds letter. If the Realtor wants more than $10, then I don’t make my offers through them.
Earnest money on REOs is typically a set amount, and here, it is $1000 usually(about 60% of banks). That equals 1.3% or so of the avg foreclosure. If you are finding agents that will submit offers on these with only $10 earnest money than they are probably not experienced in dealing with REOs as banks will usually laugh at such offers and require that earnest money is raised.