I know, I will probably be tore up on this but I would have done things differenty, not that your way is wrong but I would have gone down this path.
I completely agree on the closing company thing, I run into this all the time and it irritates the heck out of me. Typically the reason they want to close at one particular company is that there broker has a joint venture with the title company and they will make a small amount of money for closing there, usually they are paid this through a stock ownership in the company which helps them avoid respa problems. I will come right out and ask why they want to close there and if thats the reason, I will just say “if your that desperate to make $40 then ill bring you some McDonald certificates to close”. There pride will usually take over and we end up closing where I want to.
I can tell you from being a realtor and investor myself that I would be nice to all parties involved including the realtor. Many sellers will always go with what their realtors tell them to do, so if you piss her off she could tell the seller not to do business with you, or at least make things more complicated than what they needed to be.
I wouldnt advise any of my clients to do a deal with such a small deposit.
What message are you sending to the seller about your ability to close the deal?
As near as I can tell, your saying that your so confident in your ability to follow through on your contract that your willing to put up $100.
If you were a seller would you be confident in you with the big $100
I can definately see why you would want to do this, but wouldnt it be eisier to just agree to put up $1000 as a deposoit pending inspections. This way sends a strong message that your a serious buyer, and prevents you from losing $1000 because you can always use your inspection clause to back out.
In the case of a fire you know the property is in rough shape so just say in the contract something to the effect of “Earnest money to be deposoited pending the approval of contractor walk thru. Walk thru to take place within 10 business days”
If you use this way you never have to write out a check until 10 days into the deal and by then you will have gotten all of your buyers through and will know whether or not you have it sold. If you do have it sold have your buyers give you a non refundable deposoit equal to the amount you could lose if they back out. If you dont find the buyer then you dont write out a check and you cancel the contract.
This eliminates any realtors argument that you are not a serious buyer, and if they dont like your contractor clause, its alot eiser to argue “that its a big project and you need to check your costs”, than it is to argue the fact that “you have so little confidence in closing the deal that you will give up only $100”
If the deal is as good as you say it is, then I could safely assume that another investor might think it is good as well. Wouldnt it suck to miss a great deal because you wanted to CONTROL the transaction?
I guess if there is so many great deals in your marketplace that you can afford to walk away from something over such small matter, then you are absolutely correct in what your doing.
If you can honestly say that you dont need to worry about someone else moving in well your arguing about the little stuff, then perhaps the deal isnt that good in the first place.
Dont get me wrong, I think what you are trying to do makes sense if there is no possibility of the deal getting taken by someone else, or no possibility that the realtor could find someone else to offer better terms then you. If thats the case then I would play hardball and try to CONTROL the transaction too.
If there is a chance that someone else could come along and buy the house while your arguing your point of $100 vs $1000 earnest money, then I think I would just rearrange things so that everybody thinks their winning and get the deal going.
After all if you lose a deal while arguing about $1000 in earnest money, and your profit would have been $15,000, then essentially you wrote a earnest money check for $15,000 and lost it.
Eric Medemar
p.s. Go ahead fire away, I know I just stepped in front of a cannon of criticism, i’m just prevent you from making the same mistakes that I have seen made.
Unless its a really nice deal, if I get a owner who I talked to before and they gave me the runaround on price and blah blah blah, I tell them that offer no longer stands as we have used those funds for another deal. We are now in the position to only give you X amount this time around mr. seller. Just something to think about.