I understand to wholesale an REO property, one can use a double closing or add your end-buyer to the contract to get around the non-assignability issue with bank REO properties.
What about the $2,000 earnest money deposit issue. Is there a way for you to not have to pay this deposit at contract signing but have your end-buyer pay it?
he who has the gold makes the rules. $500 is the max i put out. dont let reo realtor bully you into big fee
The property is $100,000 and the Earnest Money Deposit required is $2,000
I would like to know if I’m pressed on cash and need time to find a buyer, will this protection clause work to wholesale REO bank owned properties?
“Earnest money deposit will be placed in escrow with buyer’s attorney/title company upon acceptance of buyer’s satifsactory approval of property inspection. Buyer inpection period
shall be 15 days to complete due diligence.”
Thanks, Peter
$2,000 seems a little high for that price of house. For mine that I’ve got for that it’s usually 1% or .5% of total cost.
I realize one can use the land trust to close the REO non-assignability issue, but I was just wondering:
The REO Bank states earnest money deposit (EMD) is non-refundable and requires EMD upon signing of contract.
If one is short on cash and wants to use the end-buyer’s EMD, and sends potential end-buyers to the REO R.E. Agent to view the property, couldn’t the potential end-buyers go around you and steal the deal before you actually sign the contract using the end-buyer’s EMD?
How could you work this out?
Thanks in advance!
Thanks
Thats a good question and I dont have an answer for that except, dont be short on cash or cash advance from a credit card?
Most of the times Realtors are not the ones bullying for the high deposits it is the banks who they work for. To get that amount reduced is next to impossible from my experience.
Anyway one possible way that I have used successfully is to make the deposit do upon the release of my inspection clause. That way if the deal keeps moving I just collect that amount from my investor, and if the deal is a no go then I just exercise my escape clause.
I hope this helps
Thanks for your response ericmedem.
I would like to get clear on this matter.
When you said “make the deposit do upon the release of my inspection clause”…
Do you mean have an inpsection clause such as…
“Earnest money deposit will be placed in escrow with buyer’s attorney/title company upon acceptance of buyer’s satifsactory approval of property inspection. Buyer inpection period
shall be 15 days to complete due diligence.”
Then get your end-buyer lined-up to give you the non-refundable earnest money within that time period and you then go forward and sign the babnj contract. If you have no end-buyer lined up within the due diligence time frame, then you do not approve of property inspection.
The bank states EMD must be due at signing of contract. So one can still advertise the property for buyers without a signed contract, but with a written offer proposal from the bank, rght??
Thanks.
Not sure what you mean by “written offer proposal from the bank”… You may want to clarify that…
In regards to the first part of your question… No. You can’t advertise a property for sale that you don’t own or have a contract on. Not even real estate agents can do it - they need a listing contract before they can advertise a property for sale.
And in regards to the earnest money discussion - my take is that you should try to make your offer as desirable as possible. No contingencies and large earnest money deposited at contract signature is very desirable. Contingencies and small earnest money deposited only after the contingency period is less desirable. In the end you need to decide for yourself how desirable you want to make your offer and how comfortable you are with it. In my case, the few offers I made I did not have any contingency and offered a $500 earnest money. That was what I felt comfortable with.
Good luck!