OfflineOk. For those of you doing remote investing from another state, how do you make sure you get your EM back from your cash buyer at closing? On my 1st deal, the buyer payed EM to the closing attny, which came off his purchase price, instead of giving it to me or my business partner or having the attny hold it until closing to give to me to cover the EM expense I had. I know I had to send $1k of my EM to Hud, but it seemed like I never got it back or part of it back at closing.
What are your thoughts on this?
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This should all be stated on your closing statement. Take a careful look at the closing statement and you should see that the EMD was applied to the amount paid by the buyer. It is common that the EMD be held by either an attorney or closing company. The seller should not have access to these funds until closing.
Thanks, Simon!
My guess is that the buyer made it out the title co., instead of me & having the attny hold on to it, or giving the emd to my partner to cove the funds. Either that, or don't have your buyer re-imburse you for the expense. Live & learn, right? Lol...
It sounds like this was a HUD Wholesale that you DOUBLE CLOSED.
If that is the case, then you made the difference between your purchase price and your sales price to your end buyer (minus costs).
Where they sent the earnest money has nothing to do with how much money you made. What they paid you is what they paid you, and what you paid for the property is what you paid, period.
If it's a true wholesale, then you have to have your "marketing fee" include a reimbursement of any earnest money you deposit. If you put a $2,000 Earnest and you get a $2000 Wholesale fee, you could end up making $0. Very important to know when wholesaling!