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General Real Estate Investing

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Sparkle Carlock
  • New to Real Estate
  • Indianapolis, IN
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Let's talk Earnest Money

Sparkle Carlock
  • New to Real Estate
  • Indianapolis, IN
Posted Jun 7 2023, 13:42

When dealing with wholesalers or off market properties, is it of the norm for them to require $5k EMD? If so, why? I am just very curious. Being new to REI and still looking for my first FLIP opportunity, I would like to numbers to make much sense, including contingencies, before I put down that much money upfront.

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Ernesto Garcia
  • Lender
  • Long Beach, CA
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Ernesto Garcia
  • Lender
  • Long Beach, CA
Replied Jun 7 2023, 13:46

The norm is 3% of the purchase price. I have worked with wholesalers in the past and some require 10k,15k, or 20k regardless of the purchase price. I would just be sure that your emd is refundable at the end of the day and contingent upon an appraisal or inspection if allowed on the contract. That way you have some peace of mind. 

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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Investor
  • Austin, TX
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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Investor
  • Austin, TX
Replied Jun 7 2023, 17:05

Yes it is the norm. They take the risk of you not being able to close with that money. The wholesaler stops shopping for buyers and hopes you can close.