Handling Earnest Money With Double Closings?

HELP!...please?

I am going to have some offers that will get excepted very soon and I still do not have a definitive answer to my question. Is there someone who can help me to understand exactly when an earnest money check will be debited to my bank account in the escrow processing?

I have heard that it will be hitting my account some 48 hours after my offer is excepted by the seller...and I have been told that it will not actually be debited until the actual closing of escrow.

I really need to have a plan of action if, in fact, the check will hit my bank account in just 48 hours of the seller's exceptance of my offer...

Has someone in our DG Family faced this experience and how did you handle covering the earnest money check if you did not actually have the funds available?

PLEASE write your answer in this post or PM me...

CogniWorld-LV
Theo T.

I'm new here...I suggest you search this site for Earnest Money. See the search box under Dean's chin on the home page.

Good luck.

Linda

Could you borrow the money from someone? It might be difficult to negotiate the Earnest Money down to $1 or $10 with a bank (you could try). Usually it'd be much easier to do this with an individual seller (not banks).

Essentially, you only need to get the first deal done and make your profit, then you'll have the funds for future offers.

Theo,

Just a question, has this buyer provided you with POF for his liquid capital? Or is this being held in a 'trust' that will need to moved quickly, etc.? I AM NOT ASKING ANYTHING SPECIFIC ABOUT YOUR BUYER, but only method?

I'll wait for your response before I elaborate.
OR address the EM issue

Blessings,
Jen

you, OR OR OR he is blowing smoke. I totally agree with Jen's comment. Check the guy/gal out to see if they are legite. When we get excited we do STUPID things. If he is a true partner, and you have value to offer, things will work out for both. Stand up and DO NOT start bowing down...it makes you look desparete (and small). Best of luck and I look forward to hearing how things unfold!

Yes,

I have taken your advice to heart and I thank you both for your input.

I really appreciate your advice and I have checked him out and he is what he says he is.

But, I am wondering if it is considered ethical to do something I have been considering. If I have a deal that I feel has a good chance of being accepted by the seller, would it be good to present it to a cash buyer who's criteria it fits before the deal is done?

I would be careful to guard the property's identity but could show the cash buyer the numbers and let them see that it is a deal they are looking for...

Things like the price they would buy it for, the FWV, the ARV, the anticipated rehab-costs, the ROI's and the cash flows that would come if they buy & hold.

Then when the deal does get accepted, I would already have the buyer lined up to sell it to. What do you think about this?

Theo T.
CogniWorld-LV

Hi Kien Boon Siew,

I am afraid that I don't have anyone that I could ask to borrow funds from. And, yes, it is not practical to try to give a bank or lender-seller a token few dollars for an EMD and expect them to take my offer to buy seriously.

I am going to speak with my Realtor and ask for him to either put in a contingency to allow me to take a few business days to get the EMD to the title company or maybe offer a promisory note instead, with the offer, to get the EMD check into the title company within five or ten business days of acceptance of my offer by the seller.

I hope that one of these ideas will work for me. I have been unemployed for so long and I had to borrow the down payment to get the RBBP program. I am now 5 weeks into the RBBP and I know that I am just a heart-beat away from getting my first deal.

And as you have said, just one deals means then having the funds for the future deals. I just need to be able to make offers that will let me sleep at night without worying over how to cover the EMD if my offer gets excepted.

I have made 24 offers this last week and it worries me that I also have EMD checks totalling some $37+k floating around out there.

Have a blessed week Kien,
Theo T.
CogniWorld-LV

A thousand thanks for that advise. I checked it out and found a wealth of information. You are truly an angel!

Theo T.
CogniWorld-LV

Why would it not be possible to request the EMD from the cash buyer? It seems reasonable to me, no?

Yes, it would be reasonable to ask for a cash EMD from the buyer but my question is based on timing. If I get an offer accepted, then my check for the EMD will go to my bank within 48 hours of the accepted offer.

And I may not be able to get the funds, from the eventual buyer that I am handing the deal off to, in time to cover my check. So, is it exceptable to offer the property out before I actually get it accepted by the seller?

Theo T.
CogniWorld-LV

The answer is No. It is not wise or legal to market a property you do not control or have permission to market.

This guy has millions right? Why not have him set up a fund that you can draw earnest money from when you find these deals??

Michael Mangham
MD Home Acquisitions LLC

Have the investor deposit the earnest money when due.

That becomes a condition of assignment.

If the investor is serious, if the deal is good, the investor will want the deal prior to date of earnest money deposit.

The condition of assignment is the investor deposits the earnest money.

Happy Investing!

Thanks Mike & Brad,

That was really good information. I was interviewing a new REA yesterday and I asked her about this situation and how lenders might react to a promissory clause about the EMD's within the purchase agreements along with the offer.

She said that she used a clause that stated..."The earnest money deposit would be wired to escrow within 24 hours of the offer being accepted by the seller". She said that this would be accepted 100% of the time by the sellers...banks...and that she used this for out-of-state buyers regularly.

She also said that it would give me a 48-72 hour window to get the deals picked up by the closing cash buyer and get their EMD's to my bank prior to my EMD's checks being deposited from escrow. She said that it didn't matter if the funds did get wired or if I walked into the title company and handed them a check, either, as long as it was within the 24 hour time period. Since the title company I am using understands that these deals are a double close, I am told that they will even except the EMD's from the closing buyer on my behalf too.

I like the way she thinks outside of the box! I hired her immediately and we will begin searching for deals this weekend. I will also make sure that my other REA has this information and uses it for all future offer he makes on my behalf.

Problem solved, time to make deals happen!

Thoe T.
CogniWorld-LV