BiggerPockets

I want to know if there is any way of going around a earnest money deposit once you have the POF to submit an offer.
I have about four properties that I would like to sell in So. Cal (Southren California) all under 100k and I have been asked by a realtor to obtain a chasier check (for each prop) along with the POF. Is this necessary?

An expidited response would surely be apprieciated...

Many Thanks and GOD BLESS
Jorvon

Many Thanks

Steve you are right! Makes no sense... I am buying... Now if earnest money is necessry, then how are people flipping with no money??? I am totally new to this business. However I have been doing a lot of homework... I am just trying to tighten up some loose ends...

Thanks and GOD BLESS
Jorvon

If the properties are bank owned, you will be required to provide earnest money of at least $500, and generally $1000. In fact, if you're making a cash offer, many banks will require a 10% EM deposit.

Most wholesalers of REO properties have enough cash to make the EM deposits, though as Mark said above, there are ways around it.

Originally posted by Justin S.

What other terms are you using? No inspection, quick closing, etc?

I try to have as few contingencies as possible...

- I never have a financing contingency. I make cash offers, and while I'll often change to financing prior to the closing, if for some reason I can't get financing (or don't have time to get the loan before the closing), I'll pay cash.

- I generally don't have an inspection contingency. Worst case, if there is something major I'm concerned about (structural issue, water-proofing issue, survey concerns, etc), I'll ask for 3 days max for inspections.

- I like to make large earnest money deposits...this gets the asset manager's attention. In fact, if I'm buying a property for less than $40-50K, I'll often offer the entire purchase price in earnest money. At a minimum, I'll offer $5K, and if the bank starts negotiating, I'll often use the EM amount in my negotiations (instead of raising my offer price, I'll raise my EM amount by $10-15K).

- We will generally offer to close in 2 - 3 weeks. Because these are REOs, it generally takes the banks longer to get clear title (often 3 - 5 weeks), but I assume the banks like to see that we're ready to close quickly, if possible.

- My wife is an agent, so we'll often give the listing agent a bonus for "helping us out." Generally it's $500, but if the agent went over-and-above (for example, we've had agents tell us the amount of the highest offer so we knew how much we should offer), we've been known to give our entire side of the commission to the other agent.

- These days, a lot of agents will tell us that they're planning to do some minor work on the property before it sells (clean out trash, fix a leak, etc). We'll always tell the agents that we don't expect any work to be done, so they can save whatever money they were expecting to spend.

I try to have as few contingencies as possible.

No doubt the best policy!

- I never have a financing contingency. I make cash offers, and while I'll often change to financing prior to the closing, if for some reason I can't get financing (or don't have time to get the loan before the closing), I'll pay cash.

Exactly!

I generally don't have an inspection contingency. Worst case, if there is something major I'm concerned about (structural issue, water-proofing issue, survey concerns, etc), I'll ask for 3 days max for inspections.

Perhaps not everywhere, but here in CA, I can make a 3 day or even a 0 day inspection period in my offer, then the bank sends me a ton of their onw addendums which give me 10 and up to 17 days as part of their standard addendum, even though I was offering much less!

My wife is an agent, so we'll often give the listing agent a bonus for "helping us out." Generally it's $500, but if the agent went over-and-above (for example, we've had agents tell us the amount of the highest offer so we knew how much we should offer), we've been known to give our entire side of the commission to the other agent.

This is where our strategy differs. In CA, you certainly can not purchase from the MLS if you plan on making a profit and a good deal. As an investor, youmust get the property BEFORE the MLS and thus, create relationships with the brokers who control the most REO's. They will give you the leads so you don't have to offer more than the highest bidder.
Perhaps it is different in GA and you can profit off the MLS.

That said, there are plenty of good deals on the MLS...you just need to sort through all the crap to find them...

Jscott- What is your method for sorting through them?

Originally posted by Justin S.

Originally posted by J Scott

That said, there are plenty of good deals on the MLS...you just need to sort through all the crap to find them...

Jscott- What is your method for sorting through them?

I have a bunch of custom queries set up, and every morning I'll run the queries and go through the listings one by one...

For example, my three most common queries:

- Everything listed in the last 24 hours that meets my criteria (area, price, # br, # ba, age).

- Everything modified in the last 24 hours that meets my criteria.

- Everything over 80 days old (often listings are for 90 days, so these are the ones getting ready to expire).

Between these three search queries, I'll generally have about 30-40 houses to look through, and it will generally take about 30 minutes to go through all of them.

By the time I'm done, I'll generally have 2-5 houses to look at, and I'll either go to them myself or send my project manager over to preview them and let me know if they're worth looking at.

Also, I have a list of properties that I've previously made offers on, but were rejected, and I'll resubmit my offers every 30-45 days to see if the bank is now willing to negotiate.