Wholesaling and Earnest Money Deposit

[Larry N.]

Hi, It's been said that one can do wholesaling with little to no money.  Most all sellers want either $2,500 or $3,500 refundable earnest money deposit before they will sign an agreement to sell their wholesale property. 

Then how can one get an agreement signed with seller if one does not have the $2,500 or $3,500 cash available?

So how can one be able to do a wholesale deal and get a legal equitable interest in the property without a written agreement to be able to market or assign the deal to an end-buyer?  Thanks!

[Chris Piper]

@Larry N. There is ALWAYS a way. Don't go back to the drawing board as suggested, that's just ridiculous. It sounds to me like you are NOT dealing with motivated sellers. If they were REALLY motivated, they would accept almost any reasonable offer and terms.

I always put $20 as the earnest money amount. If the seller doesn't accept it, I'll walk away and move on to the next deal with someone who actually WANTS to sell their house. You need to make sure your purchase agreement states explicitly that you may assign the property to a 3rd party. This way the seller can't complain about you assigning to a cash buyer because they signed off on it in the purchase agreement.

You don't need to have skin in the game. Wholesalers start out as cheap as possible. Most people don't have $3,000 to throw at a wholesale deal in the beginning and you shouldn't do that anyway. Do the $20 earnest only with a motivated seller, if they want more, if you can do it, that's fine. I would never go over $100. Why? Because I don't NEED the deal, but the seller is motivated and desperate and they need me. Don't sweat any deal. If it doesn't work, walk away. There are plenty of deals out there to be made.