How much do you usually try to put down? My budget is limited until I close my first deal.
$1000 is standard for reo right now. $10 to $100 is standard for FSBO
People really accept $10! Thats amazing
When wholesaling, I write $1. No kidding. Works every time, and I have been using that for over a year now. The only time I run into an issue is if they get an attorney involved. They will usually ask for $500, but as long as you are following your contingencies and keeping your word, you’ll get that money back. When people really want to sell, they could care less what earnest money is involved. That’s why you want to look for motivated sellers.
Do a promissory note for the amount to be paid at closing that way you can offer on more then one property.
Jesse, the earnest money means squat. You have to give something because a legal contract must contain a consideration to be legal. Thus you hand over $1 to make the contract a legal one.
Earnest money is NOT the same as a down payment.
If there is no equity, the seller isn’t getting anything, so there would be no down payment. If you are buying REO, offer low and the bank will come back and tell you if they want more. Usually, a bank is going to want to see where your money is coming from before they agree to sell to you. If they can see where their money is coming from, they don’t care how much of it is from your own pocket (unless they are doing the financing for you)
The deal may require earnest money but when you submit a purchase offer on a property earnest money is not legally required because your giving a promise for a promise which is legal consideration.
Real estate agents should know this because it is what makes a listing contract legal, but then what does the average agent know about it. :rolleyes
The only time you are required to come up with a buck, or something is when you take an option because there is no promise for a promise.
When I got started I didn’t put any down. Yeah, I risked the deals, but didn’t have cash to put down!
Now I’m very generous…I give em $10. :biggrin
But I do write the offer number very large, and in VERY LARGE LETTERS I write “CASH”.
I’m dating myself here, but when I was a freshman in college in 1973, I took business law. Consideration basically means you don’t get something for nothing. You’re not getting a house for free. Your offer price is your consideration.