$10 Considerations (Earnest Monies)
How do you convince a seller to accept a $10 consideration to hold the property? I hear about wholesalers and investors doing it a lot, but I need to know how.
Are there only certain types of situations that will allow $10 considerations, like only pre-foreclosure properties? What about FSBOs?
Sure,
I have heard of wholesalers and/or investors offering a seller $10 for earnest money/consideration when making an offer to purchase real estate. For the majority of the time when I have offered a seller $10 for consideration, they turn around and counteroffer with like $1000 earnest money/consideration to hold the property under contract.
Mainly for the For Sale By Owners.
How is it that some investors or wholesalers are able to have a seller accept $10 for earnest money? What type of sellers will accept $10 to hold the property under contract?
I wholesale. Sellers will take No money in hand, and infact we do not want to hand over money. We instead have a check on file with our title agent acting as an intermediary for $100. In this way we can take mulitple deals out on contract and point them at the same $100.
The reality is that if you have a contract that the legal system will look at a financial transaction of some amount to have occured to make it a viable contract. I have not run into this as this only gets important at the point of legal issues.
Again, Motivated sellers are looking for help and will follow credibility and ethical treatment.
Regards
Joe Callaghan
[ Edited by jimandlacy on Date 07/06/2008 ]
I did not give them anything i just put a dash through the amount line.
Im just hoping neither the seller or the end buyer try to get around me. Hopefully everything goes well.
this earnest money is written and given to the settlement company to hold correct?
This confussed me at first by using consideration and ernest money.
To me they are totally different things.
Good faith and earnest money are the same thing. Any real title company will not really care, what your earnest money deposit is, since that is between you and the seller., it is none of their business.
The title company will usually want a hundred bucks to pay the title agent for the title search. At one time I went thru the trouble of title company telling me nonsense, until I found one that was sensible, and used common sense.
Bilateral contract-agreement between two parties
Unilateral contact- an option
State laws vary on what is a good faith deposit, depending on the type of sale. You can go to your local library, like I did, and look up your state law concerning CONTRACTS, there will be info for you in the law books about Unilateral and Bilateral contracts.
Every state has there own rules, and yes you can use a promissory or deposit note in place of the earnest money, but like any note it will need some sort of collateral, but in most cases many motivated sellers overlook this.
Once again there is no universal or supreme mandate that states the mimimal earnest money deposit that is federally mandated, or enforced thru common law. This once again varies from your state, look up your state constitution if you must.
A Contract is legal without a transfer of cash; consideration need not be money or property--it can be just a promise to perform.
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