I’ve got deal goin on right now thats turning into something good. the thing is the seller wants 10% of the purchase price for earnest. it’ll be around $6500. im kinda new at this i dont have the $6500 but i do have the like $2000. But they’re stressing that they want 10%. What can i do??? Can anyone help??? Please
Is that just earnest money?
If so, that’ pretty hefty.
EArnest money can be as small as $100.
Now if it is a down payment then that may be ok to give, but first things first.
Have you run comparables in the area?
If it’s a rental, does it cash flow (make money after PITI and expenses are paid each month?)
What are the repairs?
Is there a deadbeat tenant already residing within?
More info please
Dennis
its a vacant property. foreclosure owned by the bank. and yes thats the earnest they want. i’ve only use $1000 at the most for earnest. the comps in the area range from the 120’s to the upper 130’s. repairs are very small. under 10k. i’ve countered there counter and told them earnest of $1100 thats my highest. this is the second counter. they’ve came down $2000 but still want the 10% of the purchase for earnest. got any good info for me if they dont come down off the earnest price? if they accept my offer but want that high earnest. what came i do??
and yes it will definetly cash flow . its a very nice property, a good deal if they’ll just work with me on the earnest .
You are evading the questions, why is it a good deal? Is this a flip or a rental.
Flip- what kind of repairs are needed?
How long to complete?
Rental-What will your mortgage payment be per month?
What is the rent?
Are utilities paid by renter?
What are taxes and insurance?
Age of building?
We trying to help but cannot give you an educated answer without some details.
Unfortunately some banks do require 10%, not all but some. Herbster
no im not evading the question. i said its small things to be done under 10 grand. it’ll be an assignment deal how can i get around this big 10% earnest, not down payment, earnest money. they want 10%.It’s looking like i’ll get the property for 65k. so they’ll want $6500 And i say its a good deal because of what the numbers are. my cash buyer will walk into some good equity. has anyone ever come across banks that asked for such a big earnest, and you didnt want to put up that much? If so how did you overcome it. did u walk away?
You can try to negotiate the earnest money, although they might not go for it. If they won’t budge…I don’t really see a way around it.
But there is one thing that stands out in your last post…you said it’s going to be an assignment deal…banks don’t allow assignments.
Here’s the problem with the earnest money. Many times you get the earnest money back, but the seller has to sign off on it with the title company.
I’ve had earnest money come back to me over a YEAR after I wrote the e money check.
I don’t think you want that.
As we’ve mentioned before, re-analyze the deal.
I would only do it if you havea slam dunk deal.
Another way to do it is to put a little on earnest money and then get yourself 10-14 days to do inspections before the rest is due. This will buy you some time.
Many real estate contracts allow for a split like this.
Dennis
Investoman, you are right they dont do assignment that was my mistake. I got it mixed up with one of the other deals im putting together. This one im doing a same day close.
Dennis, thanks I didnt know that you could split earnest money thats a great idea! I’ll try that.
Gain control of the deal. Tell the seller that it is your company policy that you only put $100 in ESCROW for an earnest money deposit. If the seller is asking for money cash in hand, DON’T DO IT! Even though you are wholesaling the deal, you need to set the terms of the deal and not let the seller dictate to what he wants. I had a seller back in October that was selling house for $28k, I talked her down to $22k which was still a good deal. I checked out the property but what killed the deal was that she wanted a thousand dollars earnest money with her holding it. I told her point blank, that isn’t how our company does business. The deal didn’t get done, but at least I didn’t get taken in process. You are doing the seller the favor by buying their house. Don’t let the seller take control of the situation.
xpandergt, You are correct for an individual seller but this guy is buying a bank foreclosure and your statement won’t work. Its the banks way or the highway. Herbster
I’d pass on this one and move on to a more motivated seller. 10% is way too high
Also before you commit on your end, you really ensure that your buyer has the ability to fund the deal.
I misread the question. Your right herbster, the bank does set the rules. That is why I rather deal with home owners, even though the best profit potential is with REO’s.
You can use my earnest money split as mentioned before.
If you are new to this game, always limit your out going expenses to a bare minimum.
that $1100 that you would use for earnest money, I could put 10-20 houses under contract for th same amount when dealing with motivated private sellers.
I would definitely look at things in this route.
Dennis