Update on EMD Funding Program!
Due to great success, the investors have decided to officially roll out the EMD Funding program to all 50 States.
- Risk free as they can make it.
- The investors do not charge any upfront fees for processing, etc. If the escrow falls through, you owe them nothing. (They just get their EMD funds back and hope to make money together on a future deal.) Their markups usually amount to a very small percentage of the EMD requester’s overall profit; you keep the vast majority of your hard-earned profits in your pocket.
- The earnest money deposit (EMD) funds can never be allowed to go hard (nonrefundable) during escrow; they must stay soft the entire time. After all, the “D” in EMD stands for DEPOSIT; those funds are not a down payment. However, some sellers, realtors and investors mix up the two. The job of the EMD fund requester (the buyer) is to bring in exit strategy monies (purchase price, down payment, rehab, etc.), by close of escrow, thereby removing any monetary incentive for the seller to want to try to keep/hold onto the EMD monies.
Here is why it is so important that EMD funds stay soft until escrow closes:
Should escrow fall through for any reason (buyer’s fault, seller’s fault, nobody’s fault), and the EMD has already gone hard, some sellers are tempted to try to keep the earnest money deposit monies as their own. The investors could lose the EMD funds they put up for you; that is not a risk they are willing to take.
- 1% EMD is the norm (say $5,000 on a $500,000 purchase price). Yet some sellers demand 2%, 5%, 10% or more. NOTE: Anything above 1%, may mean you have to pay higher markups.
Analysis: Whether EMD money goes hard or stays soft, and/or whether the EMD percentage is 1% or 10%, the seller receives exactly the same amount of money at close of escrow. That is why soft vs. hard and EMDs higher than 1% should be and usually are non-issues to most sellers once the reality of the situation has been properly explained to them. Besides that, without realizing it, sellers who put up these types of artificially high barriers often cost themselves valuable bidders for their property.
More Analysis: Most of the fixers/flippers/rehabbers we work with try to buy Off-Market (OM) properties (not retail MLS-listed); they are seeking property owners who are Distressed, Motivated, and Flexible (DMF) and NEED to sell their property right away. What you will usually find when dealing with most DMF/OMs is that the vast majority simply do not have the luxury of time to dwell on whether the $3000 EMD (on the $300,000 property they are trying to get rid of) stays soft or not. They should be and usually are focused on the getting the $300k in their pocket and moving on, ASAP. In fact, it has been their experience over the years that sellers who concentrate almost solely on finding ways to keep the EMD money may not actually be Distressed, Motivated, and Flexible sellers after all—and maybe you need to find another seller to work with.
- The investors are (second line) co-buyers on all EMD deals; that means we get a full flow of all paperwork during escrow, control contingencies right along with you, etc. The investors have no desire to own the property or create an undue burden; they just want their EMD monies protected during escrow and being a co-buyer (sort of like a temporary partner) provides us that protection without harming the buyer or the seller. Once escrow closes, they are no longer involved with the property.
EMD money is available for up to a 30 day escrow; that can be extended, but only on a case by case basis.
Make sure the seller is OK with the above; none of it is designed to be harmful to either the seller—or the buyer for that matter. The provisions in the Agreement are simply there to protect our EMD investment capital.
What comes next: Please completely fill out the Processing App.
Once investor receive the Processing App, they try to provide a tentative green light (if it is justified) within 24 hours—often less.
If interested please contact me.