How much money needed to wholesale deal?

Question

Ok, I need to know how much money I will need to shell out before I get paid :P

I've been told to say "I generally put $10 down to make the contract legal" or what have you, which is $10.  Is this right by the way, or what is the least that people are getting away with as earnest money without RE agent?  Any tricks for them not balking at the low amount?

Then, do I have to pay for the inspection up front?

Do I have to pay anything to get escrow started?

What other costs are involved?

Robin Vidovich · Answer

I agree with Jon.
Any additions to the contract needs to be initialed by both parties.
Don't rock the boat at this time.

Robin

Jon Holdman · Answer

At this point I would just move ahead.  If your buyer or seller wants out, they will find some way to get out.  Stirring the pot by trying to modify the contract at this point probably won't help.  Most likely it will go just fine.  Most likely, the $10 won't make any difference if it falls apart.

Terry Royce · Answer

Could I just write in 10 dollars on my contract since it is just blank right now? And then give the money to the title company? Or would that void the contract.?

Im sort of panicking about this now, I just really don't want the end buyer to cut me out or the contract to fall apart.

Dan Demers · Answer

This question is based on a Massachusetts contract to purchase, so it may not apply to everyone. There is a section that says ___ as a deposit to bind this offer. Then, the next section says ____ as an additional deposit upon executing the P&S. My mentor usually enters $100 in the first space and $900 in the second space to make it an even $1,000.

If we are talking about putting only $10 down, would you suggest writing in $1 and $9? That just seems like it would look goofy split up on the contract, and I don't want the buyer to get the wrong message.

Tom Sylvester · Answer

TRoyce - Although you need to be aware so that your buyer does not cut you out of the deal, most people wouldn't do that.  If they did, you would not sell them a deal in the future.  Additionally, you would probably tell every real estate investor you know what happened, and they in turn would not work with that buyer.

Jeff88 - I wouldn't be to worried about not putting cash down.  Just follow through with things as normal.

Kevin Oliver · Answer

Gents, I have done literally hundreds of wholesale deals and have rarely put any money down.  Yes that is what I said "NO MONEY DOWN".  Now on the contract I generally will put $100.00 in on the contract but since I am placing this into escrow all the escrow company needs is a check to hold.  Escrow will NOT cash the check, thus no money down.  When you assign the contract your new buyer, they place the actual 100.00 into escrow for you.  Done deal.

Good luck

Terry Royce · Answer

Jason, do you HAVE to put money down? I always hear people mention don't put anything if they don't ask. My sellers today did not ask, so I did not put anything and just put a strike through the blank spot....

I'm probably over analyzing everything, but I don't want the deal to fall apart over something stupid... and I definately don't want to get sued.

Jon Holdman · Answer

In most cases some amount of money needs to change hands to make a contract binding.

Terry Royce · Answer

Soooo.... what do I do now?

I feel like calling the seller and being like hey I forgot to give you your earnest money of 20 dollars will be odd. If the sellers never say anything, it probably wouldn't matter I guess. I am just more worried about my end buyer maybe notifying the seller and informing them so that he cuts me out of the deal.

I have read so much about putting little or no money down for assignments, and all of the sudden I've seen three posts saying it must be done for it to be binding and or legal possibly.

:shock:

Jason Hanson · Answer

You will need $10.00 for the deposit (and no, I have never had anyone balk at this..because people are motivated). Then you need advertising money to find your investor/buyer (classified ads, signs, etc).

Your biggest expense will be the marketing costs to find a deal in the first place.