EMD with Assignments

anybody?

Hello here is what my re agent and I do. On the "buyers line", obviously after my name we put "and/or assigns".

we normally put a $1,500 as our earnest money/initial deposit, but also in the RE purchase and sale agreement on the "additional terms" line we put "earnest money/initial deposit due within 7 day of acceptance or this contract is null and void".

That allows me the appropiate time to contact my buyers, and present them the propety with all the information.

100% of the time I have my end buyers already lined up, knowing there specific buying criteria I flip the contract to my end buyer, for an assignment fee, and they pay the initial deposit and close the deal. All of my end buyers are Cash buyers so they close quickly.

Hope that helps and if you have anymore questions feel fee to ask

thx for the response. so what your saying is you actually dont put any deposit up front? within the 7 days you already have a buyer lined up and you make him pay the earnest money, that would be great cause that would mean zero dollars out of your pocket? do you have to ask the buyer if he would be willing to pay the earnest money or is it something that is assumed? do you use a basic agreement to purchase contract or do use the purchase and sale agreement contract? I actually dont know the difference between the 2 so if you could enlighten me that'd be great

Thats correct I don't pay any physical deopsit up front, sometimes I will submit a copy of a check, but that physical deposit needs to be paid with in the specific time frame of 7 days, which is stated in the contract. Also, if you are planning on flipping (assigning) a propety to your end buyers, then yes they will pay the earnest money and close the deal, you assign the contract to your end buyer and collect a assignment fee. Nothing is assumed, is all in the contract which you explain everything about the property to your end buyer, but you should already know your endbuyers specific criteria when looking for properties to assign. I use a RE contract that is approved by the state, and supplied by my re agent.

Hope that helps

hey andrew, im not sure if a down payment differs from the intial deposit/earnest deposit? how is the down payment handled in the begginning of real estate transactions if your doing an assignment? or is that basically the same thing as earnest money?

down payment , initial deposit, earnest money, its all the same.

i ask cause everytime i call to make offers, they ask me how much am i down paying for the house. do i just tell them im an investor and that my end buyer will be taking care of that?

You should keep your EMD as low as possible! $500 to a 1k max! All your agent needs to know is that you buy and close on property and immediatly resell to other investors. They don't need to know that you're going to have an end buyer who is going to fund the deal, etc. You'll get the phone slammed down on you before you can finish your sentence. Anita told me that she puts in her contracts that the EMD will be due at closing AFTER the offer is accepted. I haven't tried this technique, but it sounds awesome. You can get away with EMD due after inspection period. That will buy you at least 10 days.

KimmyJ
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So the earnest money has at the most, 10 days to be paid. But you dont have to pay it???

Or lets say i have a property locked up. EM to be paid in 7 days. then 5 days into it, I have a new buyer to assign the contract to. They have to pay the EM in 2 days time?

I have no Idea. I'd like to start making offers but i really dont think im ready.

KimmyJ,
Your research/information on this site,I can not measure in words to tell you how i feel...So i say,KimmyJ gets a diamond that represents the light she brings to this forum!!!

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Randall

dantheman24,
It seems i stepped on your post,Forgive me!Andrew sounds solid on"Control the deal" and KimmyJ says "Do not give more(info)than needed" Bottom line great information for any-one making a contract.

Unfortunately, you're going to have to put some money down for an EMD, but this will reimbursed to you from your buyer. That is why I said, keep your EMD as low as possible. Right now Jason and I seem to be getting hit with 10% down when dealing with Fannie Mae. So, we're trying all different strategies to avoid the 10% which is insane on Fannie's part. Regardless, you're going to have to put something down and be creative if they want more. Just know that you will get it back from your end buyer.

KimmyJ
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