Question about earnest money

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Hello everyone, i was just wondering if anyone has come up with any creative ways of either delaying or not putting down an earnest money deposit when putting a huge commercial property under contract.

the reason for my question is that when putting commercial properties under contract the earnest money deposit can be pretty substantial (normally 1% of purchase price or a little less if you negotiate, but chances are it'll still be a lot)

i heard about a clause Scott Scheel uses that stated something along the lines of "earnest money will be due at closing" or something, but i say to all of you will something like that fly when chances are the contract will be getting reviewed by their attorney.

i plan on having pretty rock solid contingencies in all of my contracts to protect me from having my money go hard before i actually have the funding to close on the property.

[Charles B.]

Hi again Lifesstudent. To answer your first question, I only do commercial deals these days (unless a residential once in a life time deal just happens to fall in my lap) :D . As for what I say to the seller or his broker and/or attorney there really is not one pact answer to that. My presentation concerning earnest money vary depending on the seller's motivations.

There is one question that I ask almost all the time. Why do you need earnest money? Well, what if I can close by xyz day?

I also explain in detail why I can still close, but I perfer not to tie up my money with any deposits. This way they don't confuse my reluctance to provide an earnest money deposit with the inability to close. And BTW, I actually do have the money to make earnest money deposits. I simply chose not to.

Also for what is it worth, I find that many of the creative financing techniques used in residential investing do actually work in commercial investing. They will not work all the time, but thats ok. I can't buy every good deal I come across either.

I don't want to make this sound easy, because it is not. Many brokers/agents/owners/attorneys are used to doing things a certain way and they will not deviate from what they know. I suppose my message is that if you do you homework, present yourself professionally, and have your financing absolutely locked up, it is possible to find a steady supply of deals that do not require an earnest money deposit.