First wholesale deal question.
I've got a property under contract with a $100 earnest money deposit. I've got a buyer ready to sign an assignment agreement. I want to make sure this buyer puts down some earnest money to have some skin in the game an not back out and leave the deal in jeopardy. Would the intent of the buyer's non-refundable, earnest money deposit be on the assignment fee, payable to me, or for a deposit on the purchase price of the house. Obviously, if the buyer bails, I want to be the one that get's compensated rather than the seller.
Looking for an some guidance and possibly a sample if anyone is willing to share.
Thanks in advance for the help.
Hello! And congratulations on your first deal! I'm sure you're having so many emotions (excitement/worry/thrill/etc.) run through your veins as you embark on this journey.
Regarding your question, earnest money, in my experience, has always been documented on the actual sales and purchase contract that you have with the buyer, and not on the assignment fee. Since technically you'll have two contracts with the buyer (sales and purchase and assignment), there's no need to add a line for earnest on the actual assignment contract. Ultimately, if the buyer defaults and backs out of the deal, you would be entitled to the earnest money. Then you would be able to "share" a portion of that with the seller if you decided to or if you couldn't find another buyer in time(before contract with seller ends). Hope that didn't confuse you more than it did help!
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