Earnest Money and Title Company

Wholesaling
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Earnest Money and Title Company

Ken Connors
Other · Culpeper, VA · Member since 2015 · 17 posts · 1 vote

 BI am currently working as a real estate wholesaler.  My purchase contracts states that the earnest money deposit is will be deposited with the title company upon execution of the contract.

If the earnest money is nominal, say $100, do I need actually need to deposit with the title company? Also, I don’t want the title company to spend any effort until I can confirm I have a buyer. I also don’t want to pay fees for work performed on canceled contracts, although I am willing to do that if necessary.

Do you have any advice on how I should proceed? I currently have a contract on a house, but believe I will have a difficult time finding a buyer, but I wanted to give it a shot. It is likely that I will not find a buyer in the timeframe of the purchase agreement which would result in a canceled contract. What would you recommend I do in terms of the title search and closing?

Any information would be greatly appreciated.

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  • Brian Jordan
    Columbus, OH · Member since 2015 · 117 posts · 175 votes
    10y

    In my contracts, I state that earnest money will be deposited prior to the close of escrow. This allows me the flexibility to deposit it anytime during the length of my contract period; typically 14-30 days. If your contract states "upon execution" then it must be done according to what your contract states. Failure to do so would render your contract void and unenforceable. I only deposit EM upon execution if the seller requests it and I feel it's a good deal I can move quickly. 

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  • Carter CrowleyPro Member
    Flipper/Rehabber · Oshkosh, WI · Member since 2016 · 107 posts · 49 votes
    10y
    First I would tell you never put a property under contract unless you are willing to close on it yourself. If you keep doing this and backing out (with sellers) you will soon get a bad name for the type of business you run. But to answer your question... Earnest money does need to go to the title company in the specific situation you're talking about. I would just inform them on your situation and they will understand. But make sure the title company you are using is familiar with investors wholesaling houses so they understand the process.
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  • Ken Connors
    OP
    Other · Culpeper, VA · Member since 2015 · 17 posts · 1 vote
    10y

    @Brian Jordan Great point on the contract language.  I'm going to use "before close of escrow" moving forward.

    @Carter Crowley  Thanks for the information.  The seller wanted too much for the property and I respectfully declined, but then seller asked me to give it a try out of their desperation knowing I'm looking to assign the contract.  I figured if the seller is fully understanding of the probability, I would give it a try, but your right, definitely not something I enter into without the intention of closing.

    Thanks for the help!

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