BiggerPockets

I probably can't answer all the questions and I certainly am not speaking from experience...but from what I have read myself.

1. For an REO property, you will likely need $500-$1000 in earnest money.

2. In order to flip the contract on an REO, there are only a few options that I know of. You can do a double closing, you create and sell an LLC or a do a land trust. The bank technically won't know or have any control over your fee. That will be between you and your buyer.

3. The earnest money is between you and the seller. So, if you're talking to someone in a FSBO, as long as you're controlling the transaction, you help lead them into the amount of earnest money you will give. If you're dealing with a bank or owner with an agent, they will likely demand a certain amount.

4. Basically, answer 3 above also applies here

5. You only have to show proof of funds if dealing with REOs or likely a property listed with an agent. Again, if you're dealing with a FSBO, you control the transaction. You're there solving their problems, you lead them into what you want done. They are in no position to question rather you actually have the money to buy their house.

Most of this again is just what I have researched myself and some of it may be incorrect. There are a ton of helpful folks on here and they will likely chime in if I am wrong...

Good luck,

Chris

L.D
I think I might be able to help you a little with your questions.
1) When dealing with REOs you will likely need earnest money in the amount of $500 or more.
2) The banks usually will not pay a finders fee or wholesale fee to anyone. Therefore you will need to use transaction funding which purpose is to provide you with funds to close on the front end. But you must have a buyer in place on the back end. This will ensure that you receive your money.
Will Barnard and Rich Weese provide such funding here on BP.
3) When dealing with FSBO it is much easier to negotiate earnest money.
4)Again when it comes to REOs it wont be easy. But FSBOs anything is possible.
5)This is true with REOs. The banks will require some sort of proof that you have the funds to close available. You should be able to receive this from your transaction lender. But when it comes to FSBOs, if you are a good salesman you should be able to create terms that are favorable to you.
Hopes this helps.

Also there are many articles, blogs and forum post that deal with wholesaling.

Good luck.

I second the answers above.

With that said, in no way shape or form should you let these answers slow you down. All it takes is a couple deals to get your marketing up and rolling.
As a matter of fact, you can partner up with another wholesaler or investor and have them fund your earnest monies in exchange for a split of somekind.

Good luck,
Jesse

What is your business background, LD?

I guess both, LD. Just trying to get to know a bit about you!

LD...I'm an active buyer in the ATL area. I'm happy to help you any way I can.

My number can be found on my profile, here or at Facebook.

LD...the posts above have given some great answers, but I do have something to add....

One way to get around the earnest money deposit with REOs, which seems to be an obstacle for you (as it was/is) for me, is to do one of two things:

1. Specify in your contract that you will give the earnest money 3 days after your offer is accepted and contract is executed (which will give you time to find a buyer) and you won't feel like your money is tied up for no reason....

2. Specify that you will give your earnest money deposit AFTER your inspection period (usually 5-10 days). I speak from experience, I have done this successfully. Sometimes the bank will ask for half of the deposit when the offer is accepted, and the other half when your inspection period is done.

Again, I didn't get this from a book or a "how to"...I've done this myself and have been successful. Remember, you are the buyer, so you can negotiate your terms as well.

Good luck!

Great discussion on wholesaling REOs. I agree that EMD and no contingency cash offers allow you to buy at lower prices. Find a broker who understands what you do and will allow you some flexibility on timing of the supplying the EMD. If you are wholesaling the property I would not recommend putting more than $1,000 EMD on the property just in case your "buyer" can not perform. That will limit your maximum risk on the transaction.

I think the challenge in todays market of wholesaling is actually finding strong buyers with funding that can close fast and reliably. In the past there were tons of buyers with easy access to funding from hard money lenders, etc. A lot of the past hard money lenders have now gone out of business or just closed up shop.

Jim Ingersoll