BiggerPockets

My realtor told me that in rder to buy a reo property the bank wants 1oK in earnest money. The arv is $400k, and i will be offering 15ok. I told him the most I would offer is 2k. He said that the banks ask for 10k because they figure if you are buying with cash is shouldn't be a problem, or else they will think your a flake. Is this true?

While it's possible that the bank has stipulated that they require this large EM deposit, as Josh pointed out, it's probably more a suggestion than a requirement.

I would clarify with your agent (or the listing agent, if necessary) to determine if this is a requirement or recommendation, and then make your decision from there.

If you are paying all cash for an expensive REO property than don't be surprised if the banks require a large EMD.

Depends on the deal. Depends on the market. If there's alot of action on the deal and the numbers are actually good....give them what they want.

In Houston, some of the good deals are attracting multiple offers. Hence, investors/buyers are bidding over the asking prices.

If they are just busting out from another transaction, they may be just bluffing. I just turned in a deal where they wanted $5,000 earnest. I acted like I didn't read it in the offer instructions and submitted the offer with $1,000 earnest......they took it.

Cash is King! If you're buying with cash...it's like Jerry McGuirre said or whatever that guy said....the one who was the football player in the movie..."show me the money Jerry...show me the money".

Just show them where the money is or where it's coming from. Not necessarily let them hold the money....lol. Keep your money in your pocket til the deal is done.

Everything is negotiable....

If you're truly paying cash, why is this a big deal?

In my experience, if you want to get a cash deal done, just offer the entire purchase price in earnest money.

I've done this several times, and not surprisingly, the contract gets accepted, the addenda get signed and the title work gets done a lot faster than with typical deals.

Edit: Will posted his while I was writing mine...didn't mean to repeat the same thing! But I completely agree...

Just wrote a $7,500 check on a $75,000 purchase. My office as well as several others that I know of are requiring a 5-10% deposit. We are also requiring all inspections be waived prior to full acceptance.

In fact, I've never seen a bank allow an REO to be purchased without depositing certified funds in the account of either the listing agent or the title company.

hmmm thats weird. I guess everywhere just keeps getting more different. For the condo i live in i got about 9 months ago we used a personal check of only $1000 as earnest money and the last house we put an offer on we used a $2000 personal check. Cant recall the banks that owned the places but yea, they didnt seem to mind but we also showed proof of funds so maybe that made them comfortable?

I've never had a bank balk at a personal or business check for an EMD, but I've had them counter plenty regarding the amount.

The seller/agent doesn't care where the money comes from, and will never question the source (as long as you're providing certified funds). Additionally, there's nothing illegal, unethical or against-the-rules about having your end-buyer provide those funds.

I know a couple people here have said that banks allow personal checks for EMD, but that's not usually the case (in my experience, at least). So, if you're using an end-buyer's funds, make sure they're certified.

And you should be fine...