earnest money
When wholesaling, how much earnest money is best to put down with seller and how much should I take from buyer when assigning my contract?
Tyler really good question. It's standard for my company to put down 100 bucks I know some folks that only put down 10 bucks. A monetary consideration must be given to bind the contract.
Now as for our buyers we always collect at least one thousand dollars as a earnest money deposit that has to be delivered in certified funds to our title company.
Originally posted by Marcel Umphery:
A monetary consideration must be given to bind the contract.
This is a myth. In a real estate sale, the promise to purchase is considered good consideration and no earnest money is required to bind the agreement.
In answer to the OP, you want to put down as little as possible and you want your buyers to put down as much as possible. It's really that simple.
Yes no earnest money is required.Now many sellers won't sign a contract without it but that doesn't make it a requirement to be legal.
What J and Joel said. The "consideration" in a typical purchase agreement is the buyer promises to pay a certain price for the property and the seller promises to hand them the "keys" (deed) in exchange. Of course, there's several smaller details, but this is the gist of the transaction.
The earnest money is nothing more than a token of good faith that you'll hold up your end of the bargain lest you forfeit the funds. It basically gives the seller an inventive to enter into a contract with you which will "lock up" their property for a considerable period of time.