Posted by Carmen on February 25, 1999 at 19:43:40:
Don’t let the naysayers get you down! A year and a bit ago, I was told by several mortgage brokers/realtors/ etc. that there was no way in G-d’s green earth that I would be able to purchase the brand-new $135K home I wanted. Guess what - I refused to listen and kept trying, and I’ve been living in it since Dec. 97. Ever since then, I’ve learned to stop listening to the negatives - unless they come with instructions (such as the advice others post on this board). True, it is much more difficult to get some things done without cash - but you’ll have to be that much more creative, and when you DO have the cash, you won’t NEED to spend it, unlike those who are never forced by necessity to learn the alternatives. Cheers to you, and good choice on “investing” your cash on knowledge.
Posted by Marlon on February 23, 1999 at 09:54:07:
After reading the how-to articles and talking to
investors in my area, it seems ok to put only 10 or
100 down as an earnest deposit. The problem I’m
having is that I lost 2 deals because they wanted
more. One lady wanted over 1000, so I refered her
to another investor who has been in business for
over 10 years. He also refused to give more than
$10 as an earnest deposit. On my other deal, the
attorney at the title company told the people not
to accept less than $500. Is there anything I
could say to make people accept the $10? I don’t
want give $100 or $500 and loose it because I
cannot find an investor to flip to. How do
everyone else handle this objection?
$500 does seem excessive.But how good is the deal? It should be a great deal for you to even consider it. And if it’s a great deal, investors will beat a path to your door. If you have to wonder whether an investor will buy it, move on.
Realize that your deposit check won’t get cashed unless your offer is accepted (to insure this, simply write in your contract these words: “deposit due upon return of accepted agreement”). Then you should be thrilled that your $500 investment will quickly turn into thousands!I agree this could be a problem if you’re writing a lot of offers. What I do is write the checks on a credit line. The interest isn’t great but I pay the thing off when the property sells. That’s never more than a week or so. It would even be worth taking cash out on a credit card…
Posted by JohnBoy on February 23, 1999 at 10:07:10:
Typically I use a $100 deposit on my offers and most of the time no one mentions anything about it unless it’s a realtor you going through. If and when someone does ask for more earnest money, I tell them $100 is the most I ever put up on my offers. I tell them that I buy a lot of properties and make over 50 offers per month. If I was to put up $500-$1000 on all my offers then I would always have $25,000 - $50,000 of my money tied up and losing interest on all that money. I submit my offers with the intention of buying their property. If they’re intentions are to sell the property like they say they are, then the earnest deposit shouldn’t be a problem for them. If it is, then I’ll gladly take my offer elsewhere since I’m in the business of buying and there are to many sellers out there to choose from that would love for me to make an offer on their property. So my offer stands! Are you interested in selling or playing games???
Re: Earnest Money Objection - Posted by Joe Kaiser
Posted by Joe Kaiser on February 23, 1999 at 10:02:11:
Marlon,
Are you serious? $10 earnest money is no earnest money at all. As a seller, I’d be insulted and any offer that came attached with it wouldn’t be given more than a moment’s consideration, if that.
Why would you want to convey that sort of impression?
You have to understand that everything you do has a consequence, and you have to anticipate what those might be well ahead of time and figure out a solution before it becomes a problem. Offering $10 as earnest money is no solution at all.
Instead, offer $500 in a note or as a check to be held until waiver of contingencies, or better yet, avoid the issue entirely. Whatever the case, do something other than 10 bucks.
Posted by Marlon on February 25, 1999 at 12:03:19:
Thanks!!! I won’t be able to do that deal but I did get two other offers accepted. One person wanted more than the $100 but I remembered what you said and I worked. Hopefully, I’ll finally close my first deal.
Joe,
Are you talking about a “Deposit Note”? I always thought that would be laughed at by the seller or agent. I felt like they would look at it as an IOU…(the checks in the mail kind of thing)…don’t they? Anyone else use deposit notes?
Mike
Posted by Marlon on February 23, 1999 at 10:25:47:
One my first deal, I acually did offer to give her $500 after she no to 10 and 100. But she still insisted on more. So, I spent that $500 on books and a course. And the other deal, I know it would be easy to flip but I don’t have another $500. Is there some way to get it from an investor or morgage broker?
Oh yeah…I won’t have my course for a few weeks but Legrande’s book came in yesterday.
If you continue to measure a creative real estate investor by the amount of money they have in their pocket, then you’ve missed the entire point of this message board and the entire area of REI. The whole idea is that it is possible to leverage your own time and other people’s money to build a financial future for yourself. In addition, consider yourself fortunate that you’ve always had at least $500 in the bank which could be used for something other than food or shelter. Through no fault of their own, for many people, this just isn’t true and there, but for the grace of God, goes any one of us. Be thankful for your good fortune, but don’t disparage others for being short of cash. One day, it could be you.
Posted by Marlon on February 25, 1999 at 12:12:33:
Four months ago I would have agreed with you but after visiting this site everyday and reading books, I know that there is a whole different side of real estate. Especially now that I will be closing on my first deal next week with only $100 down as earnest money.