How To Handle Deposit In A Private Sale
Hello to all,
I'm a first time landlord wannabe about to purchase his first property and I'm realizing how much I don't know!!
One of the first questions that comes to mind is the issue of "earnest money" in a private sale. Normally with a broker involved, as I understand it, the broker handles the earnest money and puts it in escrow and guarantees the return of that money to the buyer if the deal falls through.
But in a private sale, there is no such guarantor. So if I were to give a deposit to a seller, what stops the seller from cashing the check until I'm good and ready to sign on the dotted line? "A promissory note", I hear you all saying, which is usually contingent on the P&S getting signed, but even AFTER a P&S is signed, things can go wrong like inspections and financing.
What is common practice with deposits in private sales?
Also, (I know it's totally negotiable and the generic answer is "as little as possible" but...) what is a reasonable amount to agree to give as a deposit from the seller?
Thanks for your advices! Love this board.
-presley
Try to leave no deposit, if they are pressuring you to leave a deposit, pick out a title company that you plan to use and leave a check with them under the directions not to cash it or release it without your written authorization. They can call your title company to verify that you did leave a deposit and you should be all set.
This suggestion is vasically what was suggested to me at one point.
Has anyone ever written a check payable to both the seller and to the closing agent? That way, the seller knows you're serious but they can't sign the check without the closing attorney's sig and they won't sign unless the closing is conducted.
Anyone ever try this?
This suggestion is vasically what was suggested to me at one point.
Has anyone ever written a check payable to both the seller and to the closing agent? That way, the seller knows you're serious but they can't sign the check without the closing attorney's sig and they won't sign unless the closing is conducted.
Anyone ever try this?