Earnest Money

I was wondering if you ever recieved a answer to your question?? I was wondering the same thing. Thanks

Great question, ok so here's what I do & others on here too. In a competitive market like San diego I dont' have in my contracts emd to be paid later, I wont get any offers accepted-this is for MLS props only! For fsbo's for sale by owner then I can put in my offers $1.00 emd or $10.00 or if it's bigger emd than to be paid after inspection period, especially if it's a motivated seller=you can do pretty much what you want if the seller is really motivated.

We always want to have the lowest emd possible, for us if were putting the emd down, or like i am doing now having my buyers do that & they like low emd's so not too much $ is tied up for them. My emd in SD is usually 1% of purch price which is average for MLS props, HUD Fanny, private sales everything on the MLS.

Now for fsbo's like I said it is diff you can offer wayy less & even after the inspection period putting the emd down, the clause wld say "Earnest money to be deposited after inspetcion period" etc. i have 14 day inspection period for fsbo's in KC & SD & 7 day inspection day period for MLS in SD & KC-to be more competitive. hope that helped.

So for MLS properties there is no getting around that right? What is the normal amount that is requested on MLS properties? Who determines that, the seller or the agent? Because wouldn't the earnest money be due right after the offer is accepted on a MLS prop? That means out of pocket expense if the buyer doesn't agree to put up the earnest money... So the no money down would be more towards FSBO's correct?

Thanks,
Bernard

The emd for MLS props has to be paid usually within 72 hours but no money down is for mls props too just ask all your buyers if it is ok if they place the emd down assuming that it is a deal & you will see that they will.

The only caveat for that is you have to move fast, the moment you get an offer countered or accepted you have to get comps from your agent, immediately as a matter of fact 2 sets of comps to verify ARV.

Generally speaking it is for fsbo's but you can still do it for mls, I do. Your buyers wont mind putting emd down as long it is a deal remember the inventory is low pretty much everywhere, you just have to get a deal that's all.

when I make offers with my agent I give them a copy of a blank check to start making offers. If one of my offers get accepted I usually tell them that I need 3 days to provide my EM because I have to move some funds around, this should buy you time to find a buyer to provide the EMD if he/she is interested. Or if you have the money yourself, you can put up the EMD and back out if you don't find a buyer within the 14 day inspection period. You will get your EMD back.

Thanks for the info guys! But how is the earnest money determined as far as how much to put down? Does that come from the agent or the seller? Or is that a number that has to be negotiated between you and the seller?

Everything is negotiable Bernard but usually for MLS props 1% of purch price is standard, now sellers agents will push to get more emd, it is yiour job as an investor to try & get the lowest amount for your offers. You should be making multiple offers & if you get a couple accepted at the same time & you are going to put the emd down then you want a lower amount, or your buyers.

For fsbo's as we discussed it is usually $1.00 or $10.00 or even $100.00. If a seller balks at the emd & it is a great deal then go ahead & give them the emd amount they want, say if they want anywhere from 1%-5%, then give it to them. You prob wont be paying that anyways.

BTW I give my agents a copy of a check with my emd amount & signed by me but leave the date blank (they cant cash that, its only to show the sellers agents I have intention to put that down, even tho my buyers will) & then when an offer gets accepted the emd is sent in 72 hrs by my seller.

I am going to do what Reynold is doing now tho, which is ask for 3 days. good stuff Reynold.

emd is traditionally 10% for retail buyers fyi, but we are not that we are investors right & we make multiple offers so if any agents tell you, you need to offer more emd to get offers accepted don't believe it, the sellers dont even care really it is the agents, the sellers agents who bug about that.

And they do that because they are trained as retail agents that you hve to get the highest emd amount to ensure that the buyer has skin in the game in other words. But this doesn't matter to us investors, we try to get the lowest amount always, and you can tell them that, that you make multiple offers so you cannot offer high $ emd's.

Don't give in to them they just want to push you around, these sellers agents, dont let them, they will think they are experts & try to browbeat you in to expensive emd's & offer amounts, dont fall in to that trap ok.

Stay strong & low emd's ok.

Thanks for all the potent info guys! I definitely feel better about things as far as this situation moving forward. It's starting to get more exciting now gaining this valuable knowledge.

Until my next question in the game...

Bernard

Another way to get around the large EMDs is to concentrate on FSBOs. In these deals there is no agent involved, so you are in charge.

If you are buying on MLS, you can also ask your agent to send you "Standard Sales". These are properties that are for sale by individuals and not bank owned. Banks will not be as flexible on EMD but with Standard Sales it is much more negotiable.

Karen

Ok, I'm having a issue with getting Emd I gave the buyer the address before he gave me the emd, he claimed that's the only way he could give me the Emd if he seen the property, I called the agent and ask her to show my partner the property. Here's the thing I couldn't put the property under contract without Emd and he stole it.... How can I prevent this from happening next time?!!!!!!

Go after standard sales, with props on the MLS. Have them under contract when you send them to your buyers-always under contract never when you dont. Unfortunately there are cut throat people in this biz so you have to be wise & make sure you have the prop under control.

Dont stress, just take a deep breath & let this one go & move on to the next ok, there are too many potential deals out there to mess around with getting stuck. I am going to stick to standard sales too because I don't have too much emd to put down right now, don't create headaches for yourself with large emd's either ok.

I went on Fannie Mae because MLS has over priced prop. And Fannie Mae requires Emd before locking up the contract that's the dilemma!

With bank owned it is a little more challenging because they will definetely want to see the money!

Thanks everyone, great DGer family, Jim