Earnest Money Strategy for 2021
What is earnest money? An Earnest Money Deposit (EMD) is a monetary amount that is used to open escrow in conjunction with a signed contract is what’s needed to open escrow on a real estate purchase.
Did you know that EMD does not need to be actual money? It can be anything of value. I could put down my cell phone to open escrow and its just as legal as $50,000 in cash. If you try that, you will need to ask the Escrow Company if they will take that kind of EMD. Just because its technically legal, doesn’t mean the Title Company will do it.
Most of my Clients ask me how I do EMD for myself. I make offers all over the Country. I may make 30-50 offers per month. Can you imagine if each offer needed $10,000 or 1% or whatever the societal norm is? One would run out of money in a hurry. I don’t want to tie up that much money until I know for sure that I am buying the house
I use a staggered earnest money strategy to give myself or my Clients maximum flexibility. Here is how it works:
Initial EMD: $500 due now
Additional EMD: $24,500
due on Day 11 after the Inspection Period
What if you don’t have $24,500? This strategy gives you 10 days to find it. Get a loan from a Gap Funder and split the profit with him/her or assign the contract to a rich person who does have the money.
If you need contract help or have contract questions, feel free to call. Don’t forget to catch us on www.5kflatfeelisting.com
Buyers get: Sellers get:
FREE Home Inspection 5k
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Best,
Geoff Nowlin, Phoenix Realtor
480-466-3737
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Geoff & Mia Nowlin
