OfflineHello everyone! I am working my way towards getting my first wholesale deal done, and I wanted to understand the process of depositing earnest money.
I am assuming that I will have to pay the seller some earnest money when I lock up a purchase agreement. Is that correct? How much will that be, and does it vary depending on if it's an MLS or non-MLS listing? Who do I make out the check to and who gets it - the seller, or the title company?
I know these are very basic questions, but I am trying to understand the nuts and bolts of the process. Thanks.
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These are good questions, earnest money is always given to the title co NEVER to the seller bc they could just cash it and that would not be good they could just keep it.
When you are making offers on MLS or listed properties you have to use some sort of amount to use for earnest but ask for the lowest amount you can like $250. if you are not in a hot area (where are you btw?)
So for MLS you have to put an amount albeit a small amount, always ask for a small amount it doesn't really matter the emd you (or rather your buyer) will get that money back bc they will be the one's puttiing that down not you, and they can get that back during the inspection period(always ask for an inspection period, 14 day one ok)
For off market props or Non MLS props not listed with a realtor, for sale by owners-when you are dealing directly with the seller of the property-just use $1.00 earnest money, just put that in your contract and dont mention it the seller prob wont either.
Sellers dont worry about that or think about that usually, if they do then increase it to $10 or $50 someting you can afford and then send that check to the title co, one you have chosen btw, call them up and ask if they do assingments of contract and double closes-the title co that say yes add those to your list of investor friendly title escrow co's and put that title co in your contract as the co. yyou will be using. hope this helps
Tony
Go faster do more! GFDM!
CaliTony, this is exactly the information I was looking for. Thank you very much!!
the short answer as little as possible LOL that way if we put it down it is nothing or almmost nothing or our buyers don't have to put down too much.
Tony
Go faster do more! GFDM!