Earnest Money Policies

2 Replies

Hey BP, I am looking at deals from wholesalers in Indianapolis. My objective is to buy and hold, achieving as close to a BRRRR as possible, but with class A- SFH assets. My question to the community is this: does anyone (everyone?) really put down a $2,500 non refundable deposit when they make their offers? I’m feeling pretty gun shy about doing that before having a title search. What if there is a large lien outstanding against the property? How non refundable are non refundable deposits? What is your average EMD, over your last 5 deals? Am I over thinking this?

@Sean McCluskey it is pretty normal that you forfeit  your deposit if you cannot or will not close on time. However you should absolutely get your deposit back if the seller cannot close or give you clear title.   Make sure this is in the contract, There are unethical jerks who would keep your deposit even if the seller didn't close because it was "Non Refundable"

I expect as a seller to get a $2000 deposit typically. Sometimes we accept $1000. I would not hesitate to put down $2500 as an EMD, but I am going to give it to the title company.

@Sean McCluskey we make our "non refundable" EMD subject to title clearing. If there are no issues on the sellers side and buyer doesn't perform then it becomes non-fundable. However if we have run title already and it has come back clear, then the EMD is just non refundable.