Earnest money deposits are purely negotiable. I’ve put up NO cash and simply a note promise of repayment. Other times I might put up $100 -$1,000. Try to limit you exposure on the deposits if you can.
Once you have the property tied up under an “assignable” contract you have a couple of options.
A) If it is a good deal, you can quickly “Wholesale” the home to another investor and make a few quick bucks for assigning your rigthts in your contract to that investor.
B) You can BLITZ the market for that home to be sold to an owner user “retail” buyer. Maybe offer owner financing to attract a lot of interest or sell it below market so the buyer feels they are getting a deal as well
C) If the contract term for a closing date does expire then you can try to renegotiate with the seller OR you earnest money deposit (remember that) might be in jeopardy of being lost for liquidated damages and your inability to perform under the contract.
It would be wise to establish some relationships with other investor / Wholesalers so that you have an “exit stratergy” developed before you tied up a property.
An all cash offer means the seller is expecting to receive ALL CASH at the time of closing based upon YOUR agree upon sales price with him / her.
HI,
If I found a property and wanted to flip it here are my questions:
I was reading the simple man’s guide to realestate and they said on a 80k home, offer 60k, but offer cash and ask to close in 60 days…
If I did this I would try to find a buyer.
how much ernest money do I have to put up ?100, 500
If I do not find a buyer what do you do? do you try to extend the period? or do you call them and say your money lender fell through?.. If you found the place through a realestate agent, how do you make it sound legit, so they will want to work with you again?
if you offer all cash when you get to the closing does your buyer need to have all cash? Does he need the same terms etc…
Thank you for your help
mark
Posted by StephenOR on February 03, 2000 at 20:32:01:
One “not-so-honest” way to go about this would be to write your promissory note for earnest money to be due and payable “at closing”. If closing never occurs, you never owe the earnest money. Any good real estate agent will see you coming, but a fsbo may not catch it.
Check out Ron LeGrand’s Wholesale/Retail tape set. You’ll be in the drivers seat to make a bundle if you follow his easy advice.
Posted by Vernon on February 03, 2000 at 19:47:56:
Mark,
Here is what I would suggest. Sign an offer to purchase subject to you obtaining adequate financing and all inspections being satisfactory. Take the next ten days or so and look for a new buyer. If you have not already established relationships with other investors, place an ad in the paper saying something like:
3/2/2 CH&A
Good Condition
Will Sacrifice $75,000cash
See what you come up with. If you find a new buyer you may have to carry some of the financing on a second mortagage. For example: You have a contract for $60,000 and you sell for $75,000. The bank will probably loan them around 80%fmv. That would be exactly $60,000. ($75,000 x .80). Then make them come up with some cash for you and finance the rest on a nice marketable note.
If you don’t get a buyer, have a contractor come by and look at the place. If his estimate to repair everything you want fixed is not to your satisfaction, you can back out of the deal and not loose your deposit. Incidentaly, try not to put