I found a house listed on the MLS I would like to submit a contract on for a wholesale deal. If the contract is accepted how do I put down an earnest money deposit without using my own funds? Also, are the TREC contracts assignable?
Usually EMD is that of your own, for the purpose of having 'skin in the game'. Particularly for residential properties... Negotiate the EMD to be $100 or less shouldn't hurt you. Make sure its held by a 3rd party and don't give it direct to the owner. Now if there is an agent involved its like to be $500 minimum EMD. Protect yourself by having an addendum included in your agreement that the funds will be returned to you in full under the following conditions: [you fill in the blank].
I'm not sure what TREC is, sorry. However if the(any) contract is assignable it will and must state so. Just give it a read through and that should provide the needed answer.
This is a tough route to go. You'll have to get it under contract at a much lower price than the listing price in order for you to add on your markup and then still be a good deal for an end buyer. Most sellers who have their properties on the MLS aren't going to accept a low-ball offer, so you'll need to submit a large number of offers.
You'll have to come up with the EM from somewhere. Sell something, pawn something, credit card cash advance, etc.
Even if the TREC contract doesn't allow assignments (I suspect it does), you can add that clause. However, in short sale or REO situations you'll end up having to sign an addendum that prohibits that. So, this only has a chance of working with an ordinary sale from an individual.
Is the property an REO or short sale or is it a standard sale?
Contracts are assignable unless they specifically state otherwise, however, if you do not want any problems, make sure to specifically state it in the contract either where you vest it (ABC Buyer, LLC and/or assigns) or include an assignment clause in the special provisions section of the TREC contract.
Typically, short sales and REO properties are not assignable due to the clauses the banks have inside their addendums.
As to the EMD, you should have your own money to put up for this, but if not, there are ways to do it. One is to line up your buyer within the time period allowed for you to get that EMD into escrow, then have your buyer place it into escrow. Another is to borrow funds from someone else for this purpose.
You will likely need a POF with your offer, so without proof of funds these days, you could have problems there too.
Thank you for your responses!!
@Mary B. TREC is the Texas Real Estate Commission contract.
@Jon Holdman the property needs a lot of work so it is a very low offer. I may pay the EMD if I can't find an end buyer quickly. This price has dropped several times because it needs so much work.
@Will Barnard it is not a short sale and I thought about lining up the end buyer first for the EMD so I may try that route.