Non-refundable deposit

[Tyler Walton]

What's up family!

Had a quick question... Once you have house under contract and find a buyer for the home, I have been told you need to get a non-refundable deposit from the end buyer. My question is what do I do with that money? Is that part of my assignment fee, or will that money be used towards my end buyers purchase of the actual property in which I would need to give to my Title company?

[Sherman Ragland]

That's actually two questions...

If it's non-refundable, technically you can do what ever you want with it.

As for how you account for it, that's a negotiation between you and the seller.

Would suggest you have a written document that spells out what you're both agreeing to with respect to the money.

What I teach is that you get a minimum of 2X what you put up for the deposit/EMD.

As an example, if your EMD is $1,500, then you should collect $3,000, non-refundable. That way if your end-user buyer walks, you would forfeit your $1,500, but still make $1,500 for your time and effort, even if the deal falls apart. Separately, you'll have a written agreement that says you are receiving $3,000 non-refundable, and $1,500 is credited towards the EMD (Earnest Money Deposit) and $1,500 towards your wholesale fee. The rest, of course, you'd get at settlement unless you two agree to something different.

Hope this helps...