Quick question, Im a newbie home flipper and just got my first property under contract. The seller wants 15% as a GFD and im a little nervous about that. If something were to go wrong and i wanted out, i would have $16,500 in escrow to try and get back...i was thinking more along the lines of 5% or MAYBE 10%.....What do you guys think? Oh and to boot the closing agent is the sellers attorney(seller gets to pick the closing agent in my county)...Any advice would be greatly appreciated!!
You are at a crossroads here. 15% is too much for a deposit. I would offer no more then say $5k but you better make sure you will find a buyer on your end or you plan on closing regardless if you sell it or not. You dont want to give up the $5k.
ok thanks....this is going to be a flip by the way....
On many REO's, and private sellers, 10% is a typical EM on cash purchases. If this is a MLS property, place the EM with your broker instead of the closing agent/title co. If there is an EM dispute, the broker can get a Deposit Dispute Resolution order from FREC, and distribute the EM accordingly. Any party that disagrees with the order can then file suit in court. If the EM is deposited with the closing agent/title co. no such option exists. If there is a dispute, it must go to court. Yes, the seller picks the title co. (as per custom in PB county, and If the seller is paying for title insurance) Section 9c-1, but that does Not mean the EM has to be placed with them.
You are going to tie up the seller's property and hoping you can sell it so the seller wants EM just in case you do not find a buyer, and it would not be a complete waste of time for the seller? It looks like this seller is educated.
Joe, the OP said this was a flip, not a wholesale deal. I think Wayne has answered Arron's question.
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