I found a good deal and I'm about to put it under contract. Is it necessary to put down earnest money or is there another alternative?
I have yet to find an attorney in MD that could answer that question. I always give an earnest money deposit to be safe. However I have used $100 dollars or even as little as $10. That is not going to fly with a listed property but it can work fine working directly with a property owner.
The issue is a technical one. Is there "consideration" to form a contract if you do not give an earnest money deposit. The answer is probably somewhere in a dusty law book and I am probably the only person that cares. Go ahead and give $10 just to be safe.
Ned brings up some good points. In Oklahoma I believe you have 3 days in order to take earnest money to take the title company before there is any issue. In this case, I have sold the property within a day or so and just had the end buyer put up any earnest money that the seller is requesting.
Thank you, gentlemen. Your feedback is greatly appreciated.
Welcome to BP.
The simple answer is NO. Earnest money is necessary when making an offer to purchase. You could even use a back of envelope to or even a napkin to make an offer, however in a real world, you wouldn't do that.
I can't speak for every state, but most states practice that way.
Hope it helps.
If you do your numbers right, $1000 deposit should be no worries ..
@Luke W. - Is EMD required at all? I've bought and sold deals without ever putting in an EMD, just closing funds in one wire. I think the real issue would be if the seller asked escrow and funds were not deposited they would be rather mad and I think they could cancel the deal.
@Nicholas Kral I believe it is, technically. However, I have also never put down EMD when dealing with a FSBO, and the title company never said anything.
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