I am putting a house under contract tomorrow but the seller is asking for $1,500 EM before I put it under contract & wants to close like tomorrow. So since I dont have $1,500 to give I was just going to have my buyer meet with us at the title company with the $1500 EM check so I can put the home under contract, sign my assignment contract with my buyer then hand over both my contract & the assignment contract to the title company. I get the difference.
Who is the EM for?
I mean I know its used to show that the buyer is serious & he/she makes it out to the title company, but where does it go from there?
Is it like a down payment?
Does it go to the seller? If so, when does it get released to the seller?
Is that how it works? Am I missing anything?
Very first thing “Earnest Money” is presented as a check to the title company (Made payable to ABC Title Company), and you should have gotten your seller to sign the contract, given a copy of the contract along with a copy of an earnest money check to the seller!
Then told the seller “I will go in tomorrow and open escrow at ABC Title Company” and enter the contract and earnest money into escrow!
Then since you have a buyer, get your buyer to sign a “Assignment agreement” and write you a check for earnest money and what ever portion of the assignment fee (To You)!
Depending on how you wrote your assignment agreement dictates how and when you get paid for the transaction, If you for instance you want $5k for your assignment, your assignment agreement say’s the total to be recieved is $1.5k EM + $5K AAF, so how do you recieve it, $1.5k + $1k upfront, balance at closing? $1.5k + $2.5K upfront, balance at closing? Or $1.5k + $5k upfront with no balance at closing? To take over contract, it’s up to you to write the terms of your “Assignment Agreement”!
The earnest money becomes part of the buyers down payment and closing cost’s and is released to seller or as part of title cost’s at close of escrow! (Earnest money is accounted for to the buyer)
Now you should bring your “End Buyer” into escrow to introduce him to his closing agent and to submit the assignment agreement to escrow! Anything you don’t get paid in the front end you will recieve at close of escrow!
New buyer steps into “Your Shoes theoretically” and does his inspections, removes contingencies and closes exactly according to your original contract!
Your buyer should already have a loan commitment prior to signing the assignment agreement!
I hope this explains it!
Yes it did help Thank you VERY MUCH!! :smile