2 Replies

Question about EMD's. So if I buy a property for 100k. The seller wants lets say a 10% EMD on the deal, with a 2 week contingency to back out. If I go ahead with the purchase, do I get that cash back, or does that just come off the purchase price? Ie

10k cash, purchase price is now 90k, which will be financed.   

My main concern is I want to limit my amount of skin in the game to at least 15%, as I want to mainly be using opm.   I want to finance that 100k, and use that 10k as a deposit towards my financing, is that possible?



@Dustin Avadar If you go ahead w/ the purchase the following may happen w/ the EMD:

  • The EMD may be applied to the Downpayment or
  • If you're approved for a loan greater than $90K then the EMD may be used to cover part of the closing costs or may be refunded to you by your lender @ closing.

It all depends on the size of the loan your approved for.  Very rare that you'll find a bank that will cover 100% of the purchase price.  If it's a fix & flip there are some who will cover 100% of the purchase & even the renovation depending on the Loan to After Repair Value.  

I know your deal may just be an example, but I would stay away from most deals that want $10k Ernest money. If something does happen after your option then you are out that money. The least amount of money you can put out before closing the less risk for you as the buyer.

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