OfflineThis is my first deal, and I am looking at submitting an offer for a property in Maryland. The offer letter was generated by my real estate agent. It doesn't include "or assignee" with regard to buyer. This is an electronic form w/electronic signatures. Should I discuss with the agent including "assignee"? Should I tell him that I wish to create the offer letter myself (the one that is included in "forms" on this site)and not allow him to use the one he created? Also, there is an earnest money requirement of $3,000 that is due when the offer is submitted to be held in escrow by the RE agency in their office. I don't have $3,000. The check I would write would be fraudulant, as I will not have the money. It states that the check (instrument) will not be cashed until the time of purchase. How and when do I get the check back since I am assigning this property and not purchasing it myself. I can't afford for this check to be submitted for payment. Please advise.
Thank you.
Melody
Hello Melody,
I am also looking to invest in Maryland. I'm not sure what you mean by an "offer letter", I just put out 16 offers with my RE agent and we used electronic signatures too. The way to do an assignment in MD is to have an addendum in the offer/contract you have your RE agent send in. The addendum is a simple 1 pg document that goes in the contract/offer that states that the contract is assignable (you can have an RE attorney or maybe an attorney at your RE agent's brokerage draft one of these).
As far as the $3,000, I would check if that is mandatory for that listing of if that is just some number your agent came up with. The standard EMD in MD is $1,000 but there are exceptions. The way I am sending EMD in is I sent my agent a photocopy of a check made out to Escrow for $1,000 and he sends that with the offer/contract. After the offer is accepted, we have 48hrs by law to have the EMD in the escrow account. So we have 24hrs to get an actual check to our agent, and he has 24hrs to get the check into the escrow account. At the point that an offer is accepted you MUST have the EMD you offered.
Also, if you are planning on assigning a contract, you need to have cash buyers and write the offer stating you will pay with cash. 90% of the time the seller will ask for a proof of funds (POF). This is not a problem. You can get a POF letter from www.coastal-funding.com
There are also other ways of getting EMD such as having your end buyer supply it in some manner, but I am not familiar with these ways. The most important part about any deal however is to have your buyers list built BEFORE you go shopping for properties/deals for them.
I hope this helps,
Glen
P.S. It'd be great to keep in contact since we're both investing in MD. If you're interested in networking feel free to mail me via this site!
"The man who acquires the ability to take full possession of his own mind may take possession of anything else to which he is justly entitled."
-Andrew Carnegie
"Man often becomes what he believes himself to be. If I keep on saying to myself that I cannot do a certain thing, it is possible that I may end by really becoming incapable of doing it. On the contrary, if I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not have it at the beginning."
– Mahatma Gandhi
Melody, first of all if you are going to wholesale a property you must have and/or assigns; may assign or something to that effect in the contract so you can pass it on to an investor with cash & make your money.
As for EMD, depending upon the type of property(who the owners are) we usually don't five any EMD until acceptance, & then only $ 1000.
If earnest money is required, make a copy of the check and attach to contract. Tell the agent that earnest money will be paid at buyers approved inspection and have her put this on the contract. Once you assign it, the end buyer will pay the earnest money. Hope this helps. (and/or assigns is needed)
shirley
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
Thank you to everyone for the great suggestions! I wrote the RE agent that I'm working with on this deal and told him that I found out that the usual EMD is $1,000. Since this is one of the agents that I am "testing" to find the one agent that I want to work with in the future, I had hoped that he would have received this news better. He's been pretty good with this deal so far since I also had him alter the original amount of the offer, which meant that he had to redo the offer. I dropped the offer by more than $20,000, and he changed the offer without even a hiccup. Unfortunately, when I wrote him about the $1K EMD vs the $3K EMD, he wasn't happy. He stated that I wasn't going to get the house anyway at the price I was offering, so I shouldn't worry about the $3K, and that it would only be a copy of the check anyway. I have four other agents courting me right now, so I'm not sure that I'll continue considering him.
Thanks also for the advice about the "assign" clause in the offer as well (Glen) as the assignment addendum. I'll definitely have my agent include the assignment addendum/clause in my offers. Please let me know if have recommendations of a good RE attorney.
One more question. What do you say to a RE agent when you tell them that you may assign the deal. I've seen on this site where a lot of people have trouble getting agents to work with them because the agent is resistent to the idea of working with a wholesaler. How have you dealt with this, if you don't mind my asking?
I love this DG site because of people like you all who offer great aid and advice when asked. I wish each of you much future success in the RE investment business!
Melody
That sounds like a typical lazy agent if you ask me. Many of them are afraid to make more than a few offers because that involves too much work. The reason he got mad is because he feels if you put down 3k EMD then it is more likely that the one offer may get accepted. But that isn't the way we work, we make many offers and few get accepted. We don't tie up 3X the necessary amount of money on one offer if it gets accepted and hope for the best.
The way I found if an RE agent will work with you if you plan to assign the deal is this.
Don't tell them "Hey! I want to do assignments. Can you help?" Just like Dean says, tell them that you want to buy, fix and flip houses. You're looking to get houses at discounts and buy fix and flip. You're confident that you'll get more houses than you are able purchase, and when this happens you would like to be able to pass the deals to other investors that you work with. How do they suggest doing this?
If they say they'll get back to you, or you cannot do that or anything like that then you know they aren't someone who you can work with. But if they say "Oh, you mean an assignment or a double closing! I did one of those just the other day," then you might have a good RE agent on the phone.
It might seem a little bit like you're lying to them when you say this, but it isn't. If you had the money to buy, fix and flip a house and make 20-30k you would right? I know I would. So you do WANT to buy fix and flip. You just don't have the capital right now, and you can explain that to them if you find they are an investor friendly realtor. You plan to build your capital using creative marketing techniques to bring many deals to you that you can make a profit off of.
Glen
"The man who acquires the ability to take full possession of his own mind may take possession of anything else to which he is justly entitled."
-Andrew Carnegie
"Man often becomes what he believes himself to be. If I keep on saying to myself that I cannot do a certain thing, it is possible that I may end by really becoming incapable of doing it. On the contrary, if I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not have it at the beginning."
– Mahatma Gandhi
Thank you, Glen. Again, great advice. I'm meeting with two agents today, and I will apply your strategies!
Melody
Good luck Melody! You can do it!
Glen
"The man who acquires the ability to take full possession of his own mind may take possession of anything else to which he is justly entitled."
-Andrew Carnegie
"Man often becomes what he believes himself to be. If I keep on saying to myself that I cannot do a certain thing, it is possible that I may end by really becoming incapable of doing it. On the contrary, if I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not have it at the beginning."
– Mahatma Gandhi