This week’s Golden Nugget is something I’ve mentioned before, but I think it would be good to talk about this issue again. It seems to be happening in many markets. It has to do with Earnest Money and Scams. I bring this up because I don’t want anyone to fall into the trap.
The trap I don’t want you to fall into is this: You spit out a round of marketing, you get a call, and you go to see the seller and his house. Afterwards, you both agree on a price. You think, I’ve got a deal! This was too easy! What’s the catch? The seller then says they have one condition: you deposit the Earnest Money directly to the seller right then and there. And, the deposit must be made in cash.
Well, this is strange? Is it not? So, let me be clear: Do not give them Earnest money! That is for the Title and Escrow Company! These “sellers” are calling Investors and pretending to sell at a great price, but only if the Earnest Money is dropped right then. This is a scam to see how many newbies fall for the trick.
Now, I don’t know this for sure, but I bet that if you pulled a Title Report there would be a lot of liens and judgments, and you wouldn’t be able to buy the house anyway. Why else would they be scamming you? Chances are they need the cash, so they scam you for the money.
So, if they then say no deal. Let them know that is fine. No deal. Because the money should be deposited with the Title Company, who will issue a Title Report. And if the Title Report says the Title is free and clear, the Earnest Money will then be deposited into the seller’s bank account. No Earnest Money? No Title Report? No deal!