No money down, but money for escrow is necessary? Is it? Help!

The way this works is to have a buyer in place and have his earnest money to you cover your earnest money to the seller. Thus no money out of pocket. I do this ALL the time. The key is having real buyers in place and then having the great deal that they want.

Also, the check isn't cashed unless the offer is accepted (in most states)

Michael

Thanks. That is very helpful. I appreciate it.

Michael's comments are absolutely valid, the better your relationship with your cash buyers, and the clearer you are on what they are looking for, the more rapidly all the pieces can come together on your deal, including cash from the cash buyers to cover the Earnest Money Deposit as well as your assignment fee.
For many new wholesalers starting out, they don't yet have this clarity and relationship with their cash buyers. I just wanted to add that throughout the country our students are using an average of $500 when they make offers on properties listed with real estate agents, due either upon acceptance of offer, or due within 3 days after acceptance of offer.
Some new students find even the idea of $500 outstanding to be a strain, and in these situations, if you do not have things lined up with your cash buyers, you should realize that the minimum Earnest Money Deposits that most of our program members are paying on For Sale By Owner properties is usually $1 or $10, a significantly lower amount. If you find yourself in this situation, you may wish to focus on FSBO properties until you have enough cash reserve to put into escrow on a listed property.
Let me be very clear as to why I am including this information here. People often use the Earnest Money Deposit as an excuse to not make offers, and that blocks success. We are unwilling, as coaches and trainers, to let anyone slide into failure using that excuse. As my first mentor in Real Estate Investing used to say: "There is ALWAYS a way!" You must make offers in order to succeed, if that means you focus on For Sale By Owners only at the beginning, so be it, but get those offers out there!

Your final paragraph was spot on. The lack of understanding of and earnest money deposit check was the reason I used not to move forward on the properties and now a few weeks on, I see what I could have done. I read Profit From Real Estate Right Now just yesterday and I now fully understand the concept that I was stuck on.

I had my first interview with a prospective seller today and it went well.
I am working on finding other properties to make offers on too as I know that being in the game is the only way to make it happen!

I was thrown a little for a week or two but I'm back now!

Your advice is much appreciated and very helpful.

Glad to hear that you have come to that realization. I made my comments because it is an uncomfortable thing for people to jump into making offers, but is actually fun and interesting, and more like a game once you get started with it. I would suggest the following: 1) Do your best not to get too emotionally connected to any single property, or to spend too much time on each one; 2) Do your best analysis, use the number formulas, and realize that sometimes we are going to make mistakes on our estimates--that is why we have a backout clause; 3) If an offer is rejected, do your best to keep the door open by saying, "I'd like to check back on things in a couple of weeks." Then put this property in a teaser file for two weeks, and if it is still available, do a resubmit offer on the property, either with the same price or a slightly modified one. Resubmit offers can increase your closing percentage by 25% or more. Don't hesitate to resubmit every two weeks as long as the property is still on the market, I've known it to take up to 5 resubmits before an acceptance. Circumstances change, sometimes from day to day, and we do not know when something may occur that makes people more receptive to your offer.

Thanks again Dallin

I really appreciate the clarity you bring to all the subjects discussed on this board. You are a tremendous help to me for sure! Thank you again!

Hi Coach Dallin
Just wanted to say thank you for responding to the questions in the forum. It is great that you are so proactive in following up with us students. And the knowledge you have about REI is awesome and a great help for all of us. Laura

First, let me sincerely thank each of you who have made kind comments, it's nice to know that some of these comments are hitting the mark for people.
I just finished a call with someone from New York who is being pressured to make a very large Earnest Money Deposit (10%) by her agent. And the agent also wanted her to eliminate the inspection clause from the offer (and have her "partners" come and inspect the property before the offer is submitted). Well, there are obviously some things that we are just not in a position to compromise.
As investors, making multiple offers, we are different than the home buyer making an offer on a personal residence. We make many offers, and we just cannot spread money around like that. And the "partners" we are talking about in wholesaling are our cash buyers--we cannot show them the property until we have it under contract.
Needless to say, this real estate agent made our program student feel pretty bad about her offer. And I want each of you to know that you have NO reason to feel that way. We are making strong offers when we offer all cash and buy properties "as is." Because of the strength of those two offer points, we need to respond confidently that as investors, we have to do business in ways that may be different than the average personal residence buyer, even if it means that some of our offers will not be accepted. There is an old saying about making offers that we must always remember: "SWSWSW--it means Some Will, Some Won't, So What--NEXT!"

It does help to hear of other experiences and it is extremely encouraging to get your input and advice Dallin.

Thanks again

Thanks Coach Dallin for this info and you are correct about students using earnest money as an excuse I have used this excuse for far to long now im starting to make more offers everyday with the help of people like you thank you.

Fredc, thank you for admitting to your excuse. All of us experience things that can or do hold us back. The person with true strength is the one who takes responsibility for when they have missed the mark on something and does what it takes to change. Anyone who wishes to be a successful real estate investor has the capability of doing so.
I have permission to share the following story. Doris is a person who is confined to a wheelchair. Doris weighs over 300 pounds. This is not a great deal of weight until you realize that Doris does not have any legs. That weight spread over a body with no legs has resulted in Doris having to have a specially designed wheelchair that is very wide.
I met Doris at a seminar, and she asked to speak with me. She informed me that her problem with real estate investing is that she cannot fit through the doorways of the houses she wants to buy. She asked me for my advice. I simply indicated that, as I saw it, she needed someone else to visit the properties, and do the work that she could not do. Doris responded that she had come to the same conclusion, and she just wanted another opinion.
Doris made no excuses, she simply went about her business setting it up in a way that would work for her. She made accommodation for her obstacles, but she did not allow them to stop her. Within her first several months as a real estate investor, I heard from Doris as she acquired and made money from 5 properties, and I have no reason to believe that she stopped after that, I simply didn't hear from her further as she had gained enough confidence to do this on her own.
For any reader who is nursing their own excuse, in my 16 years of coaching and training, I guarantee I have worked with people with 10 times worse circumstances than what most people in the program encounter, who found a way to get past the obstacles and move forward. You can too, regardless of the challenge. I constantly quote my first mentor, whose motto was: "There is Always a Way." Thanks again Fredc for admitting to your excuse and moving beyond it, I would challenge each of you to follow his example.

That was a cool info. because I'm experiencing the same
with my Broker/agent.

Hi Dallin Wall!

I'm developing self confidence on the info that you shared.
There are just few things i need to clarify.
1. Once my offer is accepted and I sign the contract, It is under the provision of the contingency if the is let says 30 days, Can i now start showing this property to my cash buyers? What's your approach if you have 10 cash buyers, will you show it on at a time to each and every one of them?
2. My Broker/agent told me to produce a proof of funds once we sign contract. What would be my approach here? I'm just in the stage of signing the contract! Can i as an assistance or proof of funds from the Insiders Cash?

Your info. is highly appreciate!

Peter

I was doing the same thing just making excuses to keep from doing what i was not sure about, so i made 6 offers on Friday and still a little scared about it but i did it. I will keep pushing to make my first deal and more.

Thanks for this post it helps

First, thanks Peter and Spellbound for adding your comments. Please know that you have those of us in the training area of the program behind you and anxious for your successes. You have my support as well as that of many others who care enough about the industry to share their knowledge and background with you.
Peter, once you have a property under contract, the law says that you have an "Equitable Ownership/Interest" in the property. That means that you have certain rights regarding the property, including the right to market that property for sale (of course subject to the existing purchase agreement that you have).
My sequencing, after I have received an offer acceptance is as follows:
1) Arrange a physical inspection of the property, since these days I make my offers sight-unseen.
2) Create a marketing piece on the property to share with my cash buyers. A method that can work well is to use www.postlets.com, where they have a template to create your marketing information. This will give the marketing information its own online address/url, which can be emailed or texted to people, or included as a link in a classified ad post.
3) Begin contacting the people at the top of my Cash Buyers List, for whom the property is the closest match, arranging to forward them the information in my marketing piece on the property.
4) Post the property marketing information on various online free classifieds.
5) Contact other contacts or potential buyers in my database, and forward them the information on the property.
6) Post Bandit Signs to promote the property.

IN answer to your other question about Proof of Funds (POF), Insiders Cash can provide those for any property that you are making offers on, feel free to use that resource as often as you need.

Hi Dallin!

Great info! Thanks you so much!

Peter

Peter, thanks so much for your comments. I realized that I neglected to mention that I also promote these properties through local Real Estate Investor Groups. I've been active with two different ones in my area, and there is a third that I can use as well. That gives me access to at least a couple of hundred experienced and novice investors, who could either end up as buyers or co-wholesalers of the property. I am a strong advocate of working with these groups, and networking with them on properties.