Originally posted by Aaron Yates:
An active wholesaler should be able to tell you how they handle the EMD. People like to say they offer $1-$100 but I can't believe any seller would only take that amount. Generally $1000 is a great EMD if you have it to work with.
The EMD amount truly can make or break the deal whether you plan to wholesale or not. If you offer $25 EMD and another buyer offers $1000 EMD for your house, which one are you going to take? Assuming the purchase price is the same. And in fact, people offering the higher EMD but lower purchase price often get the deal over the lower EMD offer.
I do $20 EMD all the time. When you have someone that is truly motivated to sell their home for whatever reason, the last thing they care about (and in most cases don't understand) is the EMD. They only see the light at the end of the tunnel. I've never had a seller question the EMD.
As for the competition ($25 vs $1000 EMD); generally when people are contacting you, there is no competition. I'm not saying it can't happen, but I've never lost a deal because of it.
Just my .02
Originally posted by Brian Stone:
I searched, didn't find anything on here about this, but I keep reading everywhere that *I* need to put an earnest money deposit on a house I will be wholesaling. So I have a contract written up that says I will put $25.00 in earnest money into escrow (which I know means to put it with the title company or a 3rd party). What exactly does this do for anyone? Why would I need to put earnest money into escrow? Does it help the seller understand that I am serious about the deal? Also, is it refundable to me? And, do I physically write the check in front of the seller and say "here is the earnest money check, which I am taking to my title company"?
Annnnd, I read on here somewhere that the person I assign my contract to, the assignee, needs to put a security deposit down. Is this necessary? And if so, is THAT refundable to the Buyer that I am assigning the contract to?
One more thing! On some contracts, I noticed that in the area of assignment to the assignee, that it says "pay an assignment fee of $______ (payable $________ with signing of contract and balance at close)." What does that mean?
What does "Payable $______ with signing of contract and balance at close" mean? If i want an assignment fee, cant i just put "assignment fee of $_______" and that's it?
Thanks to everyone for putting up with my newb questions.
Brian
When you take the paperwork to the title company, bring a money order in the amount of the EMD and they'll open escrow. That's it. You don't need show the seller anything unless they ask (I've never had this happen).
Always get a non-refundable deposit from your buyer, they'll have no issue with this if they are serious. If title issues arise that can't be resolved and the closing can't be completed, then the buyer get his/her deposit back. I have them make the check out to the title company and drop it off after I submit the paperwork. This deposit goes towards the assignment fee that you get at closing.
Here is how we state this in our "Assignment Contract"
"NOW THEREFORE for and in consideration of the sum of FIVE THOUSAND DOLLARS, $5,000, and other good and valuable considerations the sufficiency of which is hereby acknowledged, Assignor has assigned, transferred, sold and conveyed and by these presents does hereby assign, transfer, sell and convey unto Assignee all of Assignor's right, title and interest in, to and under said Real Estate Purchase and Sale Agreement.
Assignor agrees to receive and Assignee agrees to pay $1,000 of said assignment consideration as a NON REFUNDABLE deposit with the remainder to be paid on the closing date of said Real Estate Purchase and Sale Agreement."
