Posted by Natalie-VA on March 03, 2006 at 09:54:57:
Nike,
There’s been some past debate on this topic, but I’m with you. Earnest money is not required to have a valid contract. Consideration is required. Earnest money and consideration are two different things.
With that said, most sellers are going to require some earnest money in order to do the deal.
–Natalie
Deposits - Posted by Brandon
Posted by Brandon on March 01, 2006 at 16:23:42:
I am prepared to make an offer on a house I intend to wholesale. However, I am facing an obtacle with the realtor. She is insisting upon a one thousand dollar deposit. I do not have that kind of money. Does anybody have any suggestions for how to overcome this obstacle? Any advice would be greatly appreciated.
Not A Deal - Posted by Downriver Brian
Posted by Downriver Brian on March 02, 2006 at 20:46:40:
In most states a contract is not a contract without SOME type of Earnest Money Deposit.
In Michigan it is possible for one family member to utilize “love and affection” as their EMD deposit!
But if you have no money as EMD there is no contract…the seller could blow the deal at will stating that it wasn’t a valid contract! You wouldn’t want that to happen, esp if you have a good deal.
In our broker’s standard PA the EMD clause goes something like, “…in the amount of _________, due and payable on ______”. 99% of Realtors put whatever EMD their clients are going to deposit and put “immediately” in the date blank.
I do something different with some of my investor clients, I put “$1000 upon acceptance” and on the date due and payable, we put five days prior to closing. As long as the seller signs off on the PA, it’s good to go. However, if the date is left blank, default in MI is it needs to be in the broker’s escrow account within 48 hrs.
I catch a lot of hell at my office for this “out of the box” EMD policy…but then again…I’m doing deals and they want to run around having conferences for four hours about the “ethics” of such practices instead of getting business done and closing deals. THEN they want to complain about “how bad the market is”.
Bad market? WHERE? I don’t see this “bad market”. I found another buyer today and hooked her up with a Duplex that should cashflow $200 - $400 p/month! I just want to slap people silly. Just shut up and do some deals.
Re: Deposits - Posted by Sailor
Posted by Sailor on March 01, 2006 at 19:25:27:
That may be her office or personal policy, but the amount is negotiable, & could be $0. I have used a note for the deposit in years past in Calif. However, if you don’t have a 1k deposit, how can you assure the seller you can complete the deal? I would not take a property off the market for a buyer w/out deposit funds. My own minimum is 2k (I get that on a L/O on a 30 year old mobile home), & for over 30 day escrow I require an additional deposit. I know you want to wheel & deal, but depending on the type of property you are seeking, you may need a reality check–
Tye
Re: Deposits - Posted by Clint
Posted by Clint on March 01, 2006 at 16:47:11:
Depends on state, in VA, by law, you are NOT required to put down a deposit, if you are dealing with a realtor, you aren’t wholesaling, freind, keep looking!
Clint
Deal - Posted by Nike
Posted by Nike on March 02, 2006 at 23:37:31:
Seller’s may require an earnest money deposit but it is not necessary to form a valid contract. I think you’re confusing earnest money with consideration and I think you’re confused about what consideration is.