You’re excited, you sold your first property…there you are at the closing table spending that check you are about to be handed…then…POOF! No Check!
Why no check? Because you failed to be sure the buyer was qualified to buy the property you were under contract to sell.
Failed closings happen every single business day all across America even though this is an easy to solve the problem.
Sometimes, irresponsible real estate agents fail to insist on earnest money deposits from buyers and their agents. Sellers often don’t know that a good faith deposit is something that should be insisted upon.
Recently, two different Realtors in Arkansas tried to convince one of my students that they don’t use earnest money in Arkansas…yep, you heard it right, people just sling offers everywhere with no need to put any earnest money in escrow..ever.
What’s interesting is that their state contract specifically addresses the procedures for handling earnest money, even though these two agents swear there is no such thing.
Folks, a contract without consideration (earnest money or something else of value pledged) is NOT enforceable in the United States.
A buyer who fails to provide earnest money has no skin in the game and it’s quite likely they won’t close as promised since they have nothing to lose if they don’t close.
Many wholesalers lock up properties under contract without earnest money thinking that’s fine to do, but if a seller decides not to sell to them the contract becomes non-enforceable. Let this happen to you a time or two and I bet you will be all about qualifying your buyer.