no credit checks or appraisals.
We know the real estate business moves fast and we can help. We provide earnest money deposits for real estate transactions. This is not a loan, so there’s no credit checks or appraisals. There’s no personal guarantees or collateral. You decide whether to go hard on the contract.
Buyers sometimes face temporary liquidity issues that prevent them from tying up and securing a property with a contract.
Buyer is waiting for cash proceeds from the sale of another property
Commercial flip property is in escrow but investor gets opportunity to get in escrow on a really good deal before it hits the market.
Syndicator might want to make offers on multiple deals at the same time
Syndicator has $100,000 budget for EMD to find suitable property, he/she can put deposits on up to 10 properties and decide the best ones to buy.
Capital from investors may not be available until the sponsor locks up the deal
Investor wants to stand out from other offers on competitive properties with a significantly larger EMD than competitors
A property comes on the market and there are 20 offers in the same day, the buyer can make an escrow deposit for $400,000 instead of $100,000 like the competition.
Liquid capital is currently tied up in other deals
Example: 1031 Exchange – You can identify and put three properties in escrow so that you are not forced to pick specifically one.
Some of the issues might include the following:
Our EMD program gives buyers the ability to compete in today’s real estate market without risking losing a deal due to a lack of liquidity. It’s structured similar to a stock option, giving the buyer the right, but not the obligation, to buy (call) the property at an agreed upon price within the due diligence period.
HOW IT WORKS
STAGE 1
FUND EMD reviews the purchase document
• We review the purchase agreement to see if it meets our qualifications
• We review the contract to ensure the escrow language and escrow agent both meet our requirements to write an option contract. From the time client sign the application with the underwriting fee and submit a copy of the Purchase & Sale Agreement, the review and approval process can take as little as 5 days, and once approved the option can be structured within 24-48 hours.
STAGE 2
FUND EMD creates an LLC that enters agreement with the seller
• We will form a new Limited Liability Company that enters into agreement with the seller.
• The LLC becomes the signing counter-party of the Purchase & Sale Agreement with the seller. This structure has no impact on the seller since the signing entity is an LLC.
• We will structure and sell an option agreement for the property for a specific fee, giving the buyer the right to our membership interests in the LLC at any time during the due diligence soft period.
STAGE 4
Buyer purchases interest in LLC or the Contract Expires and the LLC is dissolved.
STAGE 3
Buyer works on financing during EMD due diligence period
(30-90 days)
• The buyer works on financing during due diligence period
• We wire 100% of the earnest money funds to the escrow agent and the client must wire us the fee for the option contract, at which point the due diligence period begins. The buyer now has control of the contract and is able to begin working on debt and equity financing and/or negotiating the deal from a more powerful position.
• Extensions can be filed but may not exceed our maximum total of 90 days of due diligence.
FEE BREAKDOWN
Underwriting fee: $2,400
The underwriting fee is upfront and non-refundable to determine if your purchase agreement and the escrow agent qualify. This fee is due when the contract is signed.
Option fee:
• 2.5% of the EMD amount (30 days)
• 3.5% of the EMD amount (60 days)
• 4.5% of the EMD amount (90 days)
• Minimum for option fees is $5,000 (i.e.: 2.5% of a $200,000 soft deposit requirement).
Exit fee:
• 5% of the EMD amount
• Only applicable if you choose to buy the property and is payable when the LLC membership is assigned to you.
Why Fund EMD?
• VALUE
Our fees represent a small percentage of the total cost of the property in exchange for getting the deal and not having to pass on a deal so that the investor has time to secure financing.
• PRIVATE
Working with Fund EMD keeps your privacy secured. Information about the transaction is not disclosed to the seller without consent.
• EXPERIENCE
The founders of Fund EMD have over 30 years of combined experience in real estate, investments, development, and financing. This is an innovative real estate option for buyers.
Fund EMD
2004 University Avenue #100
San Diego, CA 92104
(888) 386-3363