Why You Should Always Collect a Deposit...

You have a smoking, sexy hot deal. The house is nice. The numbers are right. And you have every buyer in town savoring over this property and they are just flooding your inbox with cash offers! Awesome feeling right! I know. So after 36 hours you decide who the winner of this illustrious deal will be. You verbally accept and so you begin to explain all the terms and conditions until….

The Buyer says “I’m not putting down earnest money because…”

Now, this is a very sticky situation. You have the highest offer on your deal, but this guy does not want to secure the contract by putting his money where his mouth is. There is an old saying that I (and you should) live by, “Money Talks, B$ Runs A Marathon.”

If this guy is serious and he’s already shown proof of funds, then he should have no reason not to give a non-refundable deposit. Notice I say, “non-refundable”; because that not only secures the contract, but it also gives you some sort of security, in the event that the buyer abruptly decides to pull out of the deal. Not only does this insure that you will be paid regardless, but it also unconsciously force the buyer to do something…. COMMIT

He now has a commitment to perform once he delivers a non-refundable earnest money deposit. In so many words, his balls are on the line now. And since I (as you should) normally will take no less than $2,000 in deposit, the level of commitment elevates even more. Now unless your buyer is a player, losing Two Grand is nothing, but even still, it’s TWO GRAND! I don’t know too many people who like losing money.

I explain this because just recently I had a transaction where one of my repeat buyers backed out less than 24 hours prior to closing. Now I know, I know, I’ve already preached to you that I normally will take no less than$2k, but this guy has bought deals consistently from me over two years, so this is one of those one-off situations where I let my emotions get the best of me.

So next time you have a deal, make sure to cover your a$$ and write on your contract, “Buyer required to deposit $2,000 (insert your amt. here) non-refundable Earnest Money within 24 hours of executing contract or contract will not be valid.”