If it's a junker house with a private seller, a very low earnest money deposit like $10 or $20 may be all that is needed. However, with a bank involved it's much more different.
Campbell, NY (PRWEB) May 07, 2013
Real estate negotiation is a major piece to real estate investing. Long time real estate investing expert, Cameron Dunlap, shares a few real estate negotiation tips to help investors with with agents.
One of the biggest concerns with all agents is time wasters. They are looking for real legitimate, serious buyers. No one likes to waste their time and real estate agents are no different. They want to make sure funds are available to close on these deals. If the investor can't close because of funding, it's very hard to establish that credibility again as a legitimate buyer.
When it comes to earnest money deposits, it's important no matter what the situation, to provide the seller, especially a private seller, with some consideration. With private sellers, sometimes it's easy to not pay them. However, without this, the contract is technically not a binding contract.
A lot of investors will ask, "how much should my earnest money deposit be?" "It really depends on the property and who the seller is," say Cameron. "If it's a junker house with a private seller, a very low earnest money deposit like $10 or $20 may be all that is needed. However, with a bank involved, it's much more different."
If a bank is involved and an offer comes in with a $10 earnest money deposit, it just won't fly. Typically they want $100 to $1000 earnest money deposit because they want to know they are dealing with a serious buyer.
For those looking to do this on a large scale, that can be a lot of money tied up in earnest money deposits. However, there is a way to only put up the earnest money deposit after the offer is accepted. So really, money is out of pocket when the offer is accepted.
When working with agents, most of them realize that banks want more than just $10. In fact, some agents may encourage you to even put up a larger earnest money deposit because it looks better and the investor has more skin in the game. If inclined or have the ability to put up a higher earnest money deposit, that can be a huge deciding factor.
Listen how Cam used the earnest money deposit as a huge advantage to beat out his competition. Both offered the same price but because his earnest money deposit was higher with no contingencies, his offer was accepted.
For those that want to watch the video, go here to watch it now.