How NOT to Pay an Earnest Money Deposit When Wholesaling Houses
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- Опубликовано: 21 окт 2024
- In this video, you'll learn what an earnest money deposit and how NOT to pay an earnest money deposit when wholesaling houses
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Shoutout to Jerry. I followed this instruction and got a 20 day inspection period with an 1k EMD being given at the end of the inspection period.
Just found a buyer to put 2k down by this Thursday. I have 5 days before the end of my inspection period. Cutting it close... Keep your fingers crossed... Trying to get a check...thanks Jerry...
+Coach Stim 601
That’s awesome! Report back once you wholesale it!
How’d you do
@@Ksaleh10 Buyer wanted to reduce his price because of the extensive rehab cost / foundation problems. Seller would not renegotiate the price and no other buyers would go higher on their offers. I canceled the contract. The seller still has not sold the property as of today.....
@@investmentincii2770 thank you for your response. I have yet to get a deal it’s kinda hard for me if you care to let me know what advice do you have?
@@Ksaleh10 make lots of offers!!!
The last piece of information that I needed, in order to give me the confidence to go for the commercial deals I am looking at. Thank you VERY much.
Did you get it?
Same I was very scared about this but Paul mccomas provide a website that can show proof of funds
how’d it go
Literally tel us how it went
This information couldn't come at a better time!! Thank you for this video!
The Flipping Genius at it again.... Thank you for so much knowledge in 5minutes
Another option that's new (it started after this video was created) is to have a gator lender fund your EMD for you.
This video was like 4 kids ago.
Good stuff.
do you have a video breaking down and explaining your sales and agreement contract? as well as your assignment contract?
Here - ruclips.net/video/gFr2A09YfAg/видео.htmlsi=1I8n1C-NImxhCF7O
Yes, this is the very last piece of info I needed too, on a confidence level omg. Thank you, Jerry!
@Angel Gonzalez Title
@Angel Gonzalez Hey! I can answer EMD questions you may have, and I can also fund EMD transactions if you ever need it.
Jerry you're a flipping flipppity flipp genius. Thanks man .. i was worried about EMD.
Excellent, multiple clear solutions in minutes , thank you 🙏
+Tareija Maria thx!
Hey, if you haven't yet, be sure to subscribe to my channel. I'm releasing videos like daily!
I’ve Been binge watching your videos, thanks jerry. God bless
Hi Jerry, Thank you so much for answering so many of my questions. Your material is so resourceful, and I really appreciate every content you put out.
I have a question about the EMD and your wholesale contract. If you did an EMD for $1,000 and then get the cash buyer to do an EMD with you (non-refundable) $1,000. At closing, if your wholesale fee is $5,000, then does the cash buyer only put in remaining amt for $4,000. Does that mean you walk away with $4,000 profit since you made a deposit for $1,000 to the house??
Nvm, found a more recent video that explains this: ruclips.net/video/BwvK-EU3OqM/видео.html
Thanks!
I love you 💖 for this video, this was a key part of going through a deal I didn't quite understand until now.. new to the channel and binge watching in all my spare time.
Great tip for us starters thank you for giving back
Will a real estate agent ever allow a emd under a 10 day or 20 day inspection period?
Hey Jerry, on the Offer Sheet to the agent, what's the proper wording/looking for the correct way to say, "EMD to be provided after executed contract, after accepted offer or at the end of 10 day inspection contingency," should I use, "which ever comes first" or should I put them in order? smh I already know I'm overthinking it lol just don't want to leave anything out and or sound redundant. Will you help me?
Thank you for all the information! Your videos are amazing
HEyyy Jerry You're a Flipping Genuis!
How do they give it to you though “ do they write the check to you directly” or do they put it to the title office like how can you use it towards the one you have under contract.
This is gold, thank you for this tip!
Hello Jerry! Great idea but can you work that with bank owned properties as well? Thanks!
Hey Jerry. I have a question. Who typically pays for the inspection? The seller, the wholesaler, or the cash buyer?
cash buyer
So when doing a double closing in escrow
Am I responsible for emd or if my buyers deposited emd on my behalf is that ok ?
Do I include the earnest money deposit on my whole sale price for the cash buyer when trying to avoid paying it after the 10 day inspection? That way it fits with the offer?
@ill Mind, Hello, did you get your question answered? Reach out to me on any questions you may have.
What if ur not able to find a seller in that 10-day window? What to do ot where do u go next?
Hey njerry does the cash buyer have to agree to give YOU the emd instead of puting in an escrow acount?
Excellent information, motivational. Thank you
Thank you, thank you my real estate agent is a scammer he said I had to give him a 1000 right after seeing the property and would be over to pick it up that very same night with papers I had to sign😭 he is open 24 hrs
+Marsha Pierre a lot of agents do that because they think it will make your offer stronger. Just tell them you will pay it once the seller accepts your offer.
@@FlippingMastery never thought of it that way thank you
You can back out during due diligence process or “inspection” without placing your EMD if you can’t find a buyer right ?.
@Arthur. I can help walk you through the process, help with comping or even help find an end buyer. Also if you need help with funding your EMD transactions, I can help with that as well.
Hey Jerry,
Great hack!
Does this hack work with listing agents? How do you convince them to include the 10 day inspection contingency clause in the contract? That way you can agree to pay EMD after inspection. Also, in dealing with the listing agent who is the EMD made out to if not your own title company?
Some agents will agree some won’t. The emd is to be held by agent or title, never the seller.
Hey Jerry, my potential seller doesn't want an EMD at all. Can it be $0?!
Yes
What if they want the EMD within 3 days and aren't allowing your 10 day inspection contingency?
Negotiate terms or accept what seller/agent will do or pass on the deal.
@@FlippingMastery Thanks Jerry!
@@FlippingMastery Jerry! I got my first property under contract. I put in the terms unrestricted access via a contractor lockbox in the deal but it's seller occupied and they said we can inspect only after 4pm during weekdays anytime weekends. LOL just wondering if I can still work this out?
@@AVALONOMEGA_ if it’s occupied then that’s great
@@FlippingMastery Omg really? Okay! Now to find a cash buyer I'm in Los Angeles. 👉👈
Hi Jerry! I have a property in the contract process right now, I am waiting for the seller to agree to attach my addendum to the contract. The listing agent also asked for a $10,000 earnest money deposit. I want to start looking for cash buyers but I do not have the property under contract yet. Any advice? Thanks Jerry!
As always amazing content, thanks Jerry!
+Trulli Tavi 👍🙏
Would your buyer at the end pay the EMD directly to you or through title/escrow?
Yes
If your EMD to the seller is supposed to go into escrow, and now your buyer gives you EMD and it also goes into escrow, how does that EMD thats now in your escrow go into the seller’s escrow. Wouldn’t that be illegal like a Ponzi scheme. Or are you having your cash buyer pay you directly the EMD and not to an escrow?
@@thedurtyversion if the contract assignable of course a buyer can pay the earnest to escrow because it's assignable it really don't matter who pays the earnest money along as the title company as it
The only issue I can think of is what is stopping the cash buyer from flaking once the $500 earnest money is deposited? What I mean by this is, $500 seems like chump change to a cash buyer who can pay $10,000 EMD to hold them to the deal until closing.
What happens if I promise the seller $500 and get the 10 day inspection grace period, then get my cash buyer to pay $10,000? What happens to the rest of the money?
Hey, Mandee! Often, the end buyer's EMD goes hard immediately in wholesale deals. If you have proper documentation in your escrow instructions, the end buyer's EMD will pay to you if they back out after the inspection period. So you won't lose money (you could even make some). Let me know if you have more questions or want some of the documents I use!
Hey jerry big fan man.
Can you or someone here explain something.
I’m just confused how to get the EMD out of an escrow account before closing to fund your EMD.
Unless their is another way around this or how does this part work.
Hey @Justin, How are things going now with EMD process? I can help you anytime with the wholesaling process and EMD funding. Please feel free to reach out anytime if you need any help with these.
So are there times where the earnest money a wholesaler puts down can also be returned to us by escrow at the end of the deal? So some states will say weather the earnest money will be non refundable? So if its non refundable we can get a non refundable earnest money deposit reimbursement from a buyer. And we clearly dont need to ask the buyer for earnest money for a refund but more for putting skin in the game for commitment
So if the EMD isnt paid till after the inspection period, then escrow isnt opened up until the EMD is paid correct?
Correct
great information. Do you have contracts or know where to get contracts with these clause on them?
+Tahlebah Colbert
Here are my contracts for free
Myquickstartkit.com
GOAT
Hey Jerry! So when I email the agent for my offer do I write it during that email that I will be giving the money after the inspection contingency or after the offer is accepted?
After the inspection contingency
It allows you to back out if you don’t find a buyer without ever having to put money up front, also makes buyer responsible for EMD instead of you so no money comes out of pocket from you, just from the buyer
Can I ask a question. How do you get the buyer to pay your EMD if they also have to pay a EMD. Do you add both EMD together ?
@@leyanasmith6881 you either make the EMD for the buyer equal to or more than the amount needed by the seller, with the contingency that EMD will be paid AFTER the inspection period - and that needs to be written in the Earnest Money Deposit section of your contract
Ideally you should find the buyer within that window of the inspection period and if you don’t find a buyer then back out of the deal before the period is over and you won’t have to pay the EMD at all
@@dominiquerunwaythank you so much for this information🙏🏼
Hi jerry , do I Need EMD if I am in your finders program ?
Yea, seller or agent will require
@@FlippingMastery Okay , will that be covered by the program or will I be paying out of pocket ?
@@caiino2019 Hello. I can help fund your EMD if you ever need it. Reach out anytime.
@@caiino2019 Jerry is the Best!! If you every need any help with EMD for any of your deals I can help just hit me up. I can also help with funding and directing you to an amazing transaction coordinator if paperwork in not your strong suit!! @jn_szafrandillard
Jerry, there's a great property in East Hollywood priced at 700k, I'm going to get a call from them soon and looking to drop the price.
There's a very similar house (they're both a 2bd/1bth) with a little less square footage that sold for $900k maybe 2 blocks away after repairs. The deal seems too good to be true or like I'm evaluating it wrong because I'm a first timer but my gut is giving it the green light. Is there's anyway you can help me out? I know this is a hail Mary as I'm sure you're super busy but just thought I'd drop this comment and cross my fingers.
@Cerberus, How did things go with this transaction? If you ever need help comping or needing a second eye to look over your numbers, feel free to reach out. I would love to help anyway that I can.
Say I'm doing the double dip on a double closing I can have the end buyer pay for the emd correct? I just tell seller the emd will be deposited after the 7-10 day inspection which is when I'll close with same title company and the end buyer will pay the closing fees plus emd ?
That could work, but if the seller is requiring the EMD during/prior to the inspection period, you will need to provide it until the end buyer does. I have a contract that does a great job of protecting the EMD during that inspection period. If you'd like a copy, reach out with your email. No fun to be losing money during inspection bc a state requires mutual release or similar.
Hey Jerry awesome videos. I have a question.. If I want to exercise my home inspection contingency, do I need to use a professional inspector or could I just inspect it myself? Cheers.
pro is needed
@Mike, you could use a professional or if you are wholesaling the transactions, your end buyers will inspect the property during the inspection period. Feel free to reach out anytime if you have any questions.
Genius
So does the cash buyer emd go to me or title company
Typically title
@@FlippingMastery thanks 😊. And do we give emd in cash or money order to title company
what about avoiding paying the EMD when wholesaling commercial? or can you only avoid it for residential? thanks
its all in the negotiation
Good stuff!!
When the cash buyer gives you their EMD for your deal, why wouldn't they put it in an escrow acct also like you do as the wholesaler? Or if they do put it in an escrow acct do they put it in the escrow acct for the seller?
It's all one escrow account for the one deal transaction. Often the end buyer's EMD goes hard immediately in wholesale deals. Let me know if you have more questions!
@Laura, Hey! How have things been going since your last post? I'm looking for other wholesalers to Jv with. Feel free to reach out. If you come across any obstacles, I would like to be a resource for you.
Hey Jerry I was just sent a contract to sign and everything I need was in the contract except emd after 10 day inspection , the agent says her company requires to get the emd within two days of signing, it’ll be a good deal just don’t have emd til I find buyer , I was going to walk away from the deal , but don’t want to if I can find another way to approach it or around it
Offer a promissory note for emd or offer a lower amount that you can afford.
One question ? What are the ways accepted to pay the EMD? Can be pay with credit card ? Or cash ? Or it has to be only a check ?
yep and even a promissory note sometimes
Thank you , the reason I asked is because i took the real estate test yesterday and the question was about that And the question said what was not acceptable to pay emd amd mention cash, debit card , check or credit card . I choose credit card 💳
@@FlippingMastery Jerry you said on another comment that you can't open escrow until the EMD is paid, so you can use a promissory note in lieu of a check until you collect a deposit from your buyer? If so, that would be great because you that means you can close in 2 weeks instead of 25- 30 days!
When I write the check do I make it out to whatever title company we choose to work with and then just snap a picture of the check with the agreed EMD to the agent?
Also does it have to be a high security check or can it just be normal personal check? Thank you in advance. I love your content and have been binge watching your videos! I am becoming more and more confident after every video! Thank you!
that works
So with the cash buyer making the EMD out to you, how do you transfer it to the seller if it’s in your name?
+Tytn369
You don’t. It’s subtracted from your wholesale fee when cash buyer pays you.
@@FlippingMastery just to clear things up, you send your original EMD check to your Title Company? Then send the EMD made out to you from the buyer to the Title Company too?
@@mintyfreshhh2 The EMD sent to the title company/escrow/attorney is from you. The EMD sent to you is from the buyer, but sometimes the buyer prefers sending it to the title/escrow/attorney instead.
How much time should you give a buyer to deposit earnest money to escrow and what if they do not deposit it?
It should happen immediately
@@FlippingMastery
hey jerry thanks for the great content,
assuming i dont have emd, once the buyer deposits the emd in my name to the title company, does the title company automatically assume that it satisfies my emd? Or do i have to authorize the release? Thanks in advance
The music is distracting. Good info though.
Does this affect the affidavit and memo of agreement? I had read somewhere online that you had to have the money passed into escrow from your EMD for it to truly cloud the title. Is this true or is there an exception during that 10 day inspection window? Thanks for the great content btw!
have you figured out an answer for this?
Any answers??
Jerry you gotta start replying to these comments! I need the answer for this too!
How does escrow know on what behalf the EMD was submitted for? Or does it not matter as long as there was a EMD submitted into escrow?
each emd must be include either a contract or be associated with a contract
@@FlippingMastery Hi, Jerry. I have a deal in New York but the agent wants me to put 5% down as the emd so my emd would be about 41,000 is that possible to find a buyer willing to put the 41,000 down
I don't know where you are, but here in San Jose it's 1% to 3% earnest money ... that is $5,000 at the least on any house ... am I right that no agent is going to go with $1,000 in this market? I think the market you are in is very important .... like Texas has a Option Fee ... and I'm confused as to why anyone would pay that in addition to Earnest.
@Scott, Hey, I can answer any questions you may have about earnest money or the wholesaling process. Reach out anytime.
Would the cash buyer get their EMD returned to them just as we would?
@Rigoberto, Hey, how things going since your last post? I can help you in the future if you ever need it.
So lets say I'm a wholesaler and got into contract with a seller while I find the buyer and there is a $200 deposit. Do I put the $200 in escrow and then I get it refunded at closing?
Hi Ivy! Yes. The EMD goes to the title company/attorney (depending on state) to open escrow. You work it into the contract to get it refunded at closing. I'm an EMD lender for wholesalers if you ever need help with any of your deals.
Thanks for the video. So you're saying that when doing these deals the wholesaler will put down an earnest money deposit with the title company and then the buyer will put down an earnest money deposit with you?
+John Simons
Yes, however some cash buyer will prefer to give the EMD to title to hold instead of you.
+John Simons
Correct!
@@FlippingMastery as i a wholseller trying to lock up a deal with a seller who wants 1k emd. I just typed in the contract that i will provide the 1k emd at the end of the 20 inspection period. So during the 20 days inspection period i just need to find a cash buyer to pay the 1k and close the deal. Am i missing anything????
@@investmentincii2770 hey I’m in a similar situation, how did this work for you?
@@forrestdudley4775 it worked out well in a deal with a regular seller .. I just typed it in the contract and he signed..
However, when I tried this method with a real estate agent it didn't work.... .I mostly deal with regular sellers...
I just lost a deal because they didn’t want to wait the inspection period. I guess that means they really weren’t motivated enough? Also, is delaying the EMD at any risk to the seller? My seller made mention that if I back out after inspection.. he would be liable for the EMD⁉️
Not liable but that emd would go to his pocket if you don't perform on the contract
@Gold. How have things been going since your post? It sounds like you need better clarity on the process so that you can explain the process better to the sellers. Did you get the help you were looking for? Feel free to reach out anytime and perhaps we can JV on a few deals together.
@@veronicagrimes. Hello.. I’m all set. I’ve learned a TON since 5 months ago. Also, I’m not including JV in my investments anymore.. Thanks for asking🙂
I need help idk what this means do I have to have the money or do I put add it to my contract and have it come out when I get my check for the buyer
request it when you make the offer
@@FlippingMastery request it from the seller or request that i put in earnest money"
I'm in CA. Does the EMD have to be 1% of sales price? My realtor will not submit my offer without a check for 1%.
+Emmabby Reborns
There is no rule about how much EMD has to be. Generally speaking agents convince sellers to require a substantial EMD. 1% is common but is negotiable.
@@FlippingMastery thank you so much for the quick reply.
1 to 3% depending on if it's a buyer's, balanced, or seller's market.
I once talked to a wholesaler who wanted me to make out the earnest money to him! Also nowadays you can just take a photo of a check and deposit it so is a photo copy still a good idea?
+Denver Chiropractor Robert Ebeling DC PC of A-Just-A-Ble Chiropractic Center
Yea never give your EMD to a wholesaler.
is this clause in you most recent updated assignment contract ? "EMD will be paid at the end of 10 day inspection"
Ron Wright no...only when you buy. When you wholesale to a cash buyer you get a non refundable deposit.
@@FlippingMastery So if we're whole selling to a cash buyer, we're the only one that gets a deposit? The seller we're connecting to a buyer doesn't want an EMD from us?
@@dartkid3666 the seller wants an EMD, but you state it will be paid after inspection. During those 10 days, you get a cash buyer , who pays you an EMD, and then when the buyer buys the property, the emd he gave you is substracted from the price the buyer pays the seller
@@shashgo So I don't have to add to the contract that EMD will be paid after 10 day inspection period? I have to verbally state that to the agent?
@@ysldre1976 No, you have to, because obviously a seller wants some sort of deposit that will be non refundable so that you are showing skin in the game. But by saying that it goes hard after the inspection period, you are making sure tht you will have a buyer who will put down a non refundable earnest money that can be used to pay off the earnest money that you owe the seller. do you understand?
I've always been under the impression that you have 72hours to make EMD deposit after start of escrow........ is that a ca state specific law. and is each state different?
Who do I make the check out to?
+Ty Ty
Title or estate broker
so i put a 500 EMD down to seller, my wholesale fee is 10k, i only made 9500 once i get paid?
EMD is reimbursed to you at closing
Can you hold off paying your earnest money deposit in a commercial deal the same way?
+Have A Badday sure, commercial is way more lenient. There are no rules for commercial. It’s whatever you and the seller agree to.
Fuck yeah dude . You’re the GOAT!!!
I didn’t subtract my earnest money from the purchase price will I still get my earnest money back?
My assignment contracts always say that the original EMD gets returned to me at the close of escrow and the end buyer is responsible for their own EMD.
@@george_domus yes haha found that out!
This guy has helped me close 6 deals already man it’s crazy
@@juan_ctzz Congratulations! Sounds like you're doing very well now. I work with other investors/wholesalers to JV with on deals. Let me know if you run into any obstacles and need help with anything else.
@@veronicagrimes. what’s up! What market are you in?
Are you in astro? Or subto?
@@juan_ctzz I'm Subto and Gator 😀
My buyer wants the property and accepted my offer but hes out of town and will be back in 2 days and I will have to pay earnest money.
Hey, Juan! If you're having trouble fronting the earnest money, let me know
@@reidferguson4604 what’s up deal been closed but what’s good
@@juan_ctzz I figured so given the timestamp. Congrats! If you ever have a similar issue with fronting EMD, reach out. Sucks to let a deal fall through over temporary EMD coverage
@@reidferguson4604 yes sir and you do gator lending I’m guessing?
@@reidferguson4604 do you have a Facebook or Instagram as well?
Who pays the money to open escrow at the title company?
+7notes
Whatever the contract states but typically buyer and seller each have closing costs but when wholesaling it’s common for buyer to pay closing fees which sre passed on to the cash buyer.
Copy that.
Okay jerry I’m in a pickle because I tried the after 10 days thing and they said legally earnest money has to be deposited within 2-3 days now what?
@Nae, Hey! How are things going now? Reach out to me if you need help with EMD or have questions with the wholesaling process.
@@veronicagrimes.can you do a $100 deposit for emd ?
@@TheMovieRecap216 Investors do it sometimes when working direct to seller but most often you will need to give more when working with agents
Could you offer $100 for EMD
Hey @Crystal! How are you? I just want to let you know that I can answer EMD questions and would love to help. Please do not hesitate to reach out.
Can u start to make videos directed towards people with no connection . I notice in alot of your videos you break down how to get a deal really well but when it comes to sellin the house youre just like “ i have contacts. Going to hit up a few contacts ” alot of people watching this do not have a sinlge person on there buyers list . Even the bittest of relationship with a contractor . Or even experience. So can u please break down how youd sell a house without contacts .