Earnest Money For Option Assignment?
I currently hold an option to purchase a property which is my first deal. I've found a buyer for the option. Is earnest money typical in this situation? Should the earnest money be put in escrow? What percentage of the assignment fee would be appropriate as earnest money?
It would really depend on how your option agreement is written. If it is a straight option and you have the right to assign your position without the consent of the seller, then you should be selling the option outright, nothing to escrow.
The end buyer will pay you, you'll notify the seller of the assignment, and the end buyer and seller will close the deal.
Of course, there are many different ways that the option could be setup, and the terms regarding your liabiltiy after the assignment.
Roger
how much is your total option fee?
Will you be colleting the balance from the buyer upfront and before the closing occurs, or do you plan on collecting the balance on the closing statement?
its not an option fee, its an assignment fee and you are best to get it up front than to put it in the escrow instructions. That way if the buyer goes around you directly to the owner, you are covered. And yes, the buyer can go around you because most options have an expiration date.