I made an offer for a very high dollar house, with a $10 Earnest Money fee. I wanted to wholesale the property. The Seller wants a $3000 option fee. Does that mean I will lose it, if I don’t sell it?
Yes you will lose it unless you put some protection clause in the agreement. I would never put down that much money on a wholesale deal. Curiously though what kind of condition is the house in that the seller is demanding that amount of deposit?
I once was working with a seller who contacted me and needed cash for his house. The entire house was burned on the inside. It was a total mess. He demanded $1000 deposit. I told him he was crazy and I walked away. I would never put my money on the line like that especially for an ugly vacant house.
The house only needs carpet replaced. $450k asking market $625.
I turned her down, but I see alot of money in the deal. I just don’t know anything about the higher end homes. :banghead
See if they’ll accept a promissory note for the $3K
You can also try shortening the option period itself. The risk for the seller is that they have it off the market while under contract with you. If you get your contractors or inspectors lined up to go in shortly after you execute the contract, then you might be able to crunch the time frame down to three days or so. They may be more likely to accept less option money if they are taking the property off the market for less time. Also, you can stipulate in the contract that the option money gets credited to you at closing should the deal go through. Just something to think about.
If this looked like a good deal this is what I would do:
- Put down $100 earnest money.
- Put a clause in the contract that says that after 15 days, you would deposit $2,900 in earnest $.
- Find someone to assign it to within the 15 days. Have them put down the $2,900. If you can’t find anyone to assign it to, you’re out of the contract.
- Assign it for $5K min.