Earnest money and proof of funds.

[Lance Pualani]

Quick question, lately I've been trying to put offers in on props that are on the MLS and the agent that I've been working with keeps insisting that I need earnest money and proof of funds. So I told him just to contact the listing agent via email and put in offers that way in order to skirt that issue. Now my question is, if I get an offer accepted do I just write up an agreement with my end buyer for my wholesale fee or do I get it under contract and approach my buyers that way? And if you say get it under contract what do I do about the EMD and POF issue?

Thanks in advance for any constructive help

[Ed Wood]

@Lance Pualani

This is exactly what you do. First off you must have a copy of the deposit and proof of funds and/or pre qualification presented at the same time as your offer. That's just how it is so no skirting the issue, anything less raises red flags with a listing agent and a experienced listing agent would probably blow you off. SO this is what you do.

1. Both your names on the purchase agreement. Put the investors name first on the purchase agreement (AKA offer) and your's second.

2. Submit the offer WITH a copy of the deposit check made out to "escrow" and provide the proof of funds and/or prequal letter.

3. When your offer is accepted and you open escrow and after you remove your inspection contingency ask escrow to addendum you off the purchase agreement and enter a agreed amount professional fee (finders fee) to be paid through escrow.

Done!

Why do you do it this way??

1. "assigns" offers are a dead give away to experienced listing agents that you're wholesaling a property and there is a larger potential for escrow fall out. This is like show up to a formal party in a nice suite but you're wearing worn out sandals.

2. By putting both your names on the purchase agreement you are protecting both your interest in the purchase. So you don't get screwed out of your fee.

3. Have your agreed fee up front with your investor before you write the offer and put it in writing. Then what you are doing is trading your ownership interest in the property for a fee and escrow can do this by a simple 1 page addendum signed by you and the investor.

Got it?