Understand Liquidated Damages and Specific Performance as an Real Estate Investor
Hey, gang, this is Mike with My Real Estate DOJO and today’s lesson is about specific performance and liquidated damages.
Alright, what does all that mean? It’s dealing with the deal you have with the seller and the deal does not go through. Basically, if a deal does not go through, for example, if you are the investor or the buyer and you have a contract with the seller and the deal does not go through, you and the buyer have the right to take the seller to court and sue him and have the court force the seller to sign the deed.
On the other hand, if you are the buyer and you have a contract and you don’t follow through, the seller has the ability to take you to court and get money or the whole amount of the purchase contract. If it was 100, then they will be able to sue you for the whole 100. Realistically, what really happens in a situation where you are the investor and you defaulted, you don’t executed, the seller keeps the earnest money.
Now, me personally, when I am dealing with a motivated seller, I only get the seller $1 of earnest money, maybe $10 at the very max, but usually only $1. If I don’t follow through, the seller will only be able to receive my earnest money, which is a $1.
Never put down 5% or 10% or $1000 or whatever a realtor wants, because I don't deal with realtors, I deal with motivated sellers. That’s my pool for fishing. In a nutshell I basically explained to you specific performances and liquidated damages. What is relating to a real estate contract with the real estate buyer and the seller.
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