Need some guidance. OUR FIRST POTENTIAL DEAL. My partner and I have presented a contract to a seller (who is also an investor) who is out of state and will not show property without an accepted contract first. In the contract we included the 20 day contingency on business partner approval. Seller has requested no 20 day contingency and that earnest funds be $1k. We offered an initial $10 earnest money and $825 earnest money on the 21st day. Removing the 20 day contingency would be risky correct? How do we handle and get this contract!
Updated 24 days ago
This is a Wholesale deal that I am trying to get under contract.
@Melanie Smith this is not uncommon. Go ahead and remove this contingency, but add "Subject to interior Inspection." The earnest money funds are not in jeopardy until you all agree as to what is in the contract and open escrow. Go look at the property and start negotiating the purchase price with him again once you see the condition. If you don't like what you see or he will not negotiate to your satisfaction then just walk away.
$10 earnest money and 20 days for business partner approval are about the weakest terms I've ever heard. I think you are lucky they countered at all. Do you have a contingency for inspection? financing? If so, you can probably drop the 20 day contingency but if not you definitely need it...
Are you using a standard contract or your own?
I have closed I think 83 transactions as Realtor, though I usually do lending now days. I have never lost a earnest money deposit though have had to fight for a couple.
Just make sure that there is a contingency for the inspection of the property in writing in the offer and be sure it allows you a few days after the inspection to either request repairs or back out completely. I would also have a third party hold t he money.
If they do not give you the money back, immediately go down and place a lien on the property. This way they cannot sale the property until they either give you back your money or win in court. The problem they have is most places it could take months before there is a hearing, in the mean time they cannot sell their property, so you have a lot of leverage to get your money back.
The out of area seller may have book airfare and a rental car to meet with you on this. I can see why he want s a bigger deposit.
In the end he cannot keep it if you inspect the property and do not like it, as long as you do in the periods specified, otherwise w hat is the point of the inspection?
In CA the buyer has 3 days to reject the property for any reason and get their deposit back. If you are not aware of what the rules are in your area, make sure it is specified in the offer in writing.
I am not sure what the rules are in your state, so I might do something like this example
Buyer shall inspect the property on (Date or between this Date and that Date. ) and shall have 3 days to accept the property, request repairs or cancel.
In CA if any new information is discovered and the buyer wishes to back out they have 3 days after the discovery to back out and get a full refund. The rules are probably different in your state so to be safe I would make sure the terms are written out and agreed upon.
This rule may be different in different states, if you do not know what the rules are put it in writing.
$10 says you arent serious. If you can't put down the $1K then you need a JV partner NOW unless you want to be the wholesaler everyone on BP hates because you are misrepresenting yourself as a buyer. Or you can find an interested buyer first and then the buyer will provide the EMD. Your contingency is inspection, not partner approval. "Partner approval" screams newbie who can't perform. You need to inspect the property no matter whether you hire an inspector or have a boots-on-the-ground person do a walkthrough. OR you can have the seller take a crap-ton of pictures and show them to your buyer. You have time for EMD and inspection so don't panic. Make a proper offer AND make sure you can perform (by having a buyer ready) and you won't have a problem.