August 2016

Earnest Money

When you join the mob, they likely will ask you to kill someone, just to make sure are serious and not wasting their time.

In real estate, people also hate to have their time wasted. Lucky for us, though, murder isn’t required to prove our sincerity.

Instead, we rely on the earnest money deposit.

The earnest money deposit, also known as a good faith deposit or simply earnest money, is money provided by the buyer when an offer is submitted as a way of showing the seriousness of the offer. This deposit is essentially the buyer saying, “Look, I really want to buy this property, and I’m putting my money where my mouth is.”

The earnest money is pledged, and should the buyer not fulfill his end of the contract, the seller can keep the money. So yes, you can lose your earnest money! However, there are certain conditions that allow you to back out without losing it, which we’ll talk about.

But first, let’s talk about how much the earnest money deposit is.

https://www.youtube.com/watch?v=b3o4ll8Jh20

(Click to read on BiggerPockets…)

When I was a child, every Saturday morning was the same: Wake up early, pile into the minivan with my mom and three siblings and start looking for . . . garage sales! Yes. I was raised by a “garage sale mom.”

Because we didn’t have a lot of money, we bought nearly all of our clothes, furniture, toys and pretty much everything else from someone who no longer wanted those items. And, let me tell you — my mom was the master at those sales. She knew how to find the coolest gadgets, toys, games and appliances for pennies on the dollar. She could negotiate a 50-cent t-shirt down to 10 cents, and regularly did. She would even buy far more than we needed, just so she could resell those items at her own garage sales and make a profit to fund our family vacations.

Today, I do far less garage-sale shopping than my mom, but the lessons I learned from her haven’t changed. I still want to find a great deal. Today, however, instead of 50-cent t-shirts, I spend much of my time hunting down great real estate deals, because I’m a real estate investor.

Whether I plan to flip that house, hold the property as a rental or go for something entirely different: Everything begins with a great deal. Here are four simple tips you too can use to find better deals on your own real estate, whether you’re looking for an investment, a property for your business or simply a home for your family.

1. Consider buying a bank-foreclosed property.

When someone fails to pay a mortgage payment for an extended period of time, the lender will ultimately repossess the home and remove the occupants. Once the home is empty, the lender generally lists the house for sale on the market, using a local real estate to list it.

While the foreclosure, in itself, is of course sad (no one rejoices when someone loses a home), once the deed has been done, these properties can be some of the best deals you’ll find in real estate. Banks want to be in the business of lending money, not managing property, so they are often quick to offer large discounts just to get the deal off their books. Translation: You can get a great deal on foreclosed properties, if you know how to buy foreclosures right.

(Click to read on BiggerPockets…)