SS128: Consideration in Real Estate скачать в хорошем качестве

SS128: Consideration in Real Estate

Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing Consideration in Real Estate. One of the most important requirements of a real estate contract is consideration. In this episode, Charles discusses what consideration is and why it is a significant part of all real estate contracts. TALKING POINTS ➡ When we are discussing legal topics and clauses such as; contracts and consideration, it is important to realize that I am not an attorney, and that you should always seek the advice of counsel prior to making any investment decision. ➡ There are 7 basic requirements, mandated by law, that must be present to have a valid real estate contract: o 1. The contract must be in writing and there must be an offer and an acceptance of said offer. o 2. The contract must have mutual assent and legal purpose. o 3. The contract must identity all of the parties involved. o 4. The contract must identity the subject property. o 5. The contract must identity the purchase price of the subject property. o 6. The contact must be signed by all parties involved; and o 7. The contract must include consideration. ➡ What is Consideration? o Consideration is when one party offers something of legal value to another party in a contract. o Items that have value include; money, services, and other valuable goods. Without consideration, a contract is not legally enforceable. o In a real estate contract more specifically, consideration is typically an earnest money deposit. The buyer is providing an earnest money deposit (or EMD) in exchange for the performance or a promise to perform. o A simple example would be that a buyer offers $100,000 to purchase a home and the seller accepts this offer. The buyer will offer an earnest money deposit (the buyer’s consideration). The seller is agreeing to sell the home to the buyer (the seller’s consideration). Consideration is usually refundable; in part or whole; however, it is transaction dependent. o Consideration is due at the time of contract signing. The earnest money deposit is deposited and held by a neutral third party (usually always an escrow or attorney). Once this happens, the contract is valid. Escrow is usually opened by the seller but, I have opened it before as a buyer (especially when buying single family houses for cash). It makes the process easier for the seller. I normally would tell the seller that escrow will be opened within 48 hours. ➡ The typical earnest money deposit is 1%-3%. If you are in a competitive market or there are multiple offers, you might want to increase your EMD, to make for a stronger offer. ➡ In most residential contracts, there are a number of contingencies that allow you to get out of the contract and receive your earnest money back. These include; home inspection/due diligence, the appraisal contingency or the financing contingency. ➡ Earnest money going “hard” is a term used by investors. Going “hard” is the point where part or all of the earnest money deposit is becoming non-refundable. ➡ In hot markets, it is common practice for a portion of an earnest money deposit to go “hard” day 1. We are selling an apartment complex right now for about $10 million and the buyer is putting down an earnest money deposit of 1% with ½ of that or about $50,000 going hard day 1. This shows us, the sellers, that this buyer is serious. Another example would be a couple years back where an investor was purchasing a $6 million apartment complex from us and they put $50,000 hard day 1. Well, they were unable to get financing for one reason or another and we kept their $50,000 earnest money. ➡ Day 1, non-refundable deposits are a tactic that should only be used by experienced investors. Connect with the Global Investors Show, Charles Carillo and Harborside Partners: ◾ Setup a FREE 30 Minute Strategy Call with Charles: http://ScheduleCharles.com ◾ Learn How To Invest In Real Estate: https://www.SyndicationSuperstars.com/ ◾ FREE Passive Investing Guide: http://www.HSPguide.com ◾ Join Our Weekly Email Newsletter: http://www.HSPsignup.com ◾ Passively Invest in Real Estate: http://www.InvestHSP.com ◾ Global Investors Web Page: http://GlobalInvestorsPodcast.com/ ◾ Global Investors Facebook:   / globalinvestorspodcast   ◾ Global Investors Instagram:   / globalinvestorspodcast   ◾ Charles Carillo LinkedIn:   / charleskcarillo   ◾ Foreign Investing in US Real Estate Facebook Group:   / foreigninvestinginusrealestate   #globalinvestors #CharlesCarillo # RealEstate