Problems with RE Agents and Proof of Funds - Posted by Brian W(IN)

Posted by Brian W(IN) on April 16, 1999 at 15:35:50:

Thanks alot for you reply. I will keep this in mind when I talk to my investors.

Problems with RE Agents and Proof of Funds - Posted by Brian W(IN)

Posted by Brian W(IN) on April 16, 1999 at 14:57:23:

I have a quick question. I am in the process of working with an RE Agent who is looking up properties for me to wholesale/flip. The problem is that she says that before I am able to close on any deals, I will have to come up with at least $1,000 for earnest money and $2,000 for her fee. The thing is, this money has to be put in escrow immediately after an offer has been accepted. Also, she stated that the bank, which owns the property, will ask for proof of funds. The problem is I don’t have the money to put in escrow - $3,000. Should I try to get it from my investors? If so, how should I present this to them. They are already willing to pay me to assign my contracts over to them.

Bank requirements - Posted by John Behle

Posted by John Behle on April 22, 1999 at 18:32:45:

The REO department may have told the agent to push for that amount of money - but you do not have to. Agents also push for higher earnest money on their own or as instructed by their brokers.

You can put up any amount of earnest money on a deal. I once bought 8 properties with $1 earnest money. On the other hand, it can influence the seller - especially a bank. I have no problem putting up even a large sum of earnest money if it helps get the deal accepted. On one deal last year we put up $18,000 earnest money. It was a bank REO and helped get the offer accepted.

It can really help to show you’re serious at times, but don’t put money at risk unless your are ready, able and willing to do the deal. Never speculate on someone else coming along to take you out of the deal. It’s called “the greater fool theory”.

Re: Problems with RE Agents and Proof of Funds - Posted by Rob FL

Posted by Rob FL on April 18, 1999 at 17:24:45:

Find another realtor. Unless you have signed some sort of buyers broker agreement requiring the 2K in escrow, I would fire this guy. There are plenty of other “starving” realtors who would be glad to represent you.

Re: Problems with RE Agents and Proof of Funds - Posted by BankRobber

Posted by BankRobber on April 17, 1999 at 08:59:30:

Excuse me for not answering your question, but on a related matter… Occasionally I will get ridulously low written offers submitted to me on properties that I own and have listed on MLS. Invariably these offers will not have the required earnest money check attached. I find it amusing to call the agent that submitted the offer, express interest, but insist that I will not sign the offer till I get an earnest money check. After they drop the check off at my office I rip up the contract and tell them to come pickup the check. :slight_smile: The point being- few good agents are going to submit your offer without earnest money.

Re: Problems with RE Agents and Proof of Funds - Posted by Joe(IN)

Posted by Joe(IN) on April 16, 1999 at 20:42:52:

Brian,
I’m in Indiana, and I just closed on an REO, and I’ve made several other offers. My agent has never asked for more than $500, and he dose not expect to get that until my offer is accepted. In addition, I personally have not seen any deal where the agent’s fee comes from the Buyer. So, I don’t know what she’s trying to pull, but I think I would go agent shopping and find out what is normal for your area.
Joe

Re: Problems with RE Agents and Proof of Funds - Posted by JPiper

Posted by JPiper on April 16, 1999 at 15:44:51:

Brian:

What are you doing putting up $2K, in advance in escrow, for an agent fee?

MOST of the time agents are paid by the seller, even if you have buyer representation. If you entered into an agreement with your agent to put up $2K commission for their fee this is unusual. Collecting it in advance is even more unusual.

I’d make myself a new deal with my agent.

JPiper

Re: Problems with RE Agents and Proof of Funds - Posted by PBoone

Posted by PBoone on April 16, 1999 at 15:10:48:

As a rehabber I would gladly put up the cash ($3000.) for escrow AFTER you have proven you know what you are doing. On the first one I would suggest to put a contingency in the agreement "$3000.00 deposit to be placed in escrow after all other contingencies have be satisfied"
The only other contingency needed is "Subject to contractor bids not to exceed preliminary estimated amount"
Try that
Pat