Hi, I'm just wondering if anyone has had any experiences with a seller objecting to a small EMD, like $100? If so, what rationale do you use to explain it?
Are you planning to buy the property or tie it up and try to resell to someone else? I would look at $100 to be no skin in the game at all especially on something more than a $15k-$20k class property. Maybe they have heard of people not really wanting to buy the houses and walking away when they couldn't find a buyer. Personally I put up $2000 at least to show I am serious.
Sorry to clarify this would be to wholesale the property.
Unless they're generally clueless, they'll see it for what it is.
What that means is that you have inadvertently come across what some call an "unmotivated seller."
Others call such people, "Sellers with two brain cells to rub together."
If your business strategy requires finding people dumb enough to accept a meaningless EMD, you are going to need to move on from this one.
So as a wholesaler, how much should one put down? I've heard many podcasts and other wholesalers saying they put little down and even NOTHING.
Because their business strategy depends on finding people dumb or desperate enough not to care.
Ok, what kind of EMD should a wholesaler put down?
If I was a seller anything less than 1% with a $500 minimum would tell me they are an unmotivated buyer.
don't listen to these guys. If they are truly motivated sellers, which is who we as wholesalers market to then they just want to get out of the house or to sell it. I use $10 and in FL I don't have to use anything. But I guess if it is a smoking great deal put the EMD up in escrow because you will get it back once you sell.
If you have a buyer lined up or a strong buyers list why not have them put up the EMD.
I have used as little as $10. I often say here is a deposit to make the contract legal. If they object you can say "Normally the deposit would be held by the agent or title company so you wouldn't see it until closing anyway."
Now, when wholesaling you should only be doing deals you are confident you should be able to pull off, so putting up a real deposit like $1,000 shouldn't be a problem. If you are trying to do listed deals with small deposits you are not only fooling yourself you are looking like a fool to others.
Ned Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/
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