So i have an reo deal on the table and the agent explains to me that the bank will most likely require an earnest money deposit, which i expected, but i don’t have 2-3k that im expecting the deposit is going to be. What I plan on doing is a double close and sell it to another investor. So my question to all is there anyway around having to put down the 2-3k earnest money? Or whats the best solution to keep the wheels rolling?
There are several ways to get around this. One is to take in a partner who can put up the earnest money for a percentage of the profit.
Another is to bird dog it to the investor you’re going to sell it to.
You won’t make as much money as if you did your self but at least you’ll get something and next time you won’t need to do it this way.
donrock
Another alternative is to put in the contract that you will put up $100.00 in earnest money now, and the remaining $1,900 or $2,900 or whatever on the day of closing. So, when closing comes, your buyer’s $ will be used for the earnest $.
rgchamb,
I’m not sure how what you’re suggesting would work. If a seller wants $2,000 earnest money why would he accept $100 and then not get what he asked for until the deal closed. If he would be willing to accept $100 then the balance is a mute point.
The purpose of earnest money is to compel one party or the other to perform. If I was a seller and someone offered me that deal I’m afraid I’d have to decline.
If I’m missing something let me know because this would be a great way of holding onto cash for the buyer. Please enlighten me in case my senility has got in the way of clear thinking.
donrock
Donrock: For example, the standard TX purchase contract allows for some earnest $ to be deposited when the contract is signed, and some within so many days after the contract is signed (the amount of days is obviously negotiable).
I’ve put up $10 in earnest money before & the Seller didn’t care.
If my financial situation was such that I couldn’t come up with $3K via a partner or other means, then as an RE investor, being creative is what it’s all about. If the Seller says no, then NEXT! I just find something that fits the current financial profile.
rgchamb,
OK if that works where you invest then that’s the way to do it. I’m from California along with being retired so you’ll have to forgive me if I’m not completely up to speed on the way things are done in other parts of the country.
Good luck,
donrock
Donrock: I’ve heard CA is a different animal w/r/t REI.