Buyer with most money wins?

6 Replies

I have searched the forums, and it appears I am the only one who has asked this question. Probably not, but I tried all the keywords I could think of, and it didn't show up...and didn't want to have to skim through over 1,700 posts!

Anyhow, I just showed a property this Saturday and one of the potential buyers said they wanted the place and wanted to know if they could put earnest money down to hold it. Since it was the only offer I'd been given in months, I said sure, if they could put $2,000 earnest money in escrow I'd hold off advertising and showing while they ran their application through my RMLO. Well, 96 hours later they finally made it to the bank to deposit the earnest money, but still haven't even filled out the app. I check in with them daily to try and keep on top of it, but I don't want to have to hold their hand all the way to the closing table.

So here's the twist, someone that had seen the property a week prior, just called today and said they wanted the place. I informed him of the situation, but he said he is willing to put down more money, plus he makes better income. Of course, I would still put him through the same screening process with the RMLO to make sure; but before I have him pay the application fee and go through the process I want to make sure I can do this without getting into some sort of trouble. I didn't make any promises or sign anything with the first guy, other than I would hold off advertising and showing, but this guy looked at it a week prior to them. And he is willing to put down $10K more, pay more monthly, and structure a shorter term to payoff quicker (i'm selling with seller financing).

Has anyone encountered this and how did you handle it?

@Andrew Hartzel  no legal advice, Most contracts say things need done by certain times. I would sign a contract with the other guy, get his ernst money and return money to the first person. In my mind it isnt who has most money, its whose first to sign the contract. 

Not sure why you would accept an earnest money deposit without a signed purchase agreement. There are a lot more terms to be spelled out than the amount of deposit.

I am a buy and hold investor. So I don't sell houses. That being said I have run into renters like that "all" the time. Therefore I have a no "holds" policy. The first " qualified person" to turn in "everything (credit/background check, application depsiit, etc) gets the house. I do not hold. I have had many times where someone has been dragging their feet taking a week to get everytjjng on an another person does it in 3 hours. I say that being each and every time "I" have been burned

Originally posted by @John Horner :
Originally posted by @Ron Drake:

Not sure why you would accept an earnest money deposit without a signed purchase agreement. There are a lot more terms to be spelled out than the amount of deposit.

My thoughts exactly.

 Of, course I understand there is more to a deal than earnest money. The money didn't go to my bank account. It's being held in an escrow and will be given back if they don't qualify. I'm asking they put it up to show they are serious. I don't want to spend my time and money screening someone if they aren't serious. I've had that happen a couple times on this house, and it's frustrating. I make sure they qualify before I sign agreements with anyone.

That being said, I got in touch with a few other fellow investors, and got some good advice.  It's pretty much along the lines of what @Elizabeth Colegrove said. I wanted to know if I was on the hook for anything, and how to let the other know they weren't getting the place.  

@Jeremy Tillotson  Thanks! Thats what I'll be doing, most likely. I'm not ruling anyone out at this point. I'm letting them all fill out the app and it will be a comparison of who is better qualified and/or who took action first. Of course who is willing to pay more is a big qualifying factor. 

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