In any contract where the buyer has the option to proceed and be entitled to loss proceeds you better wait until the insurance claim has been processed and a settlement offer has been made.

The Brokerage charges all of its clients the Fee, regardless of whether the client is a purchaser or seller.The Buyer filed a lawsuit against the Brokerage alleging that the Fee violated the Real Estate Settlement Procedures Act ("RESPA") because the Brokerage did not provide any services to support the Fee.

If a buyer learned you were netting funds from a settlement, they could simply tell the third party closer no.

But the margin is too thin unless I can get the settlement price lower than the BPO.

The one I found was an investment property that was part of a divorce settlement.

Buying a note right after settlement puts you in a lender's position, not a note investor, I would draft the funding as arbitrage loaning money on the note then roll it over as a purchase 3 or 6 months later.

So I moved in before settlement.

A judge may deem that 5% is sufficient under the circumstances, the value of the property, term of the option, market rents or income from the property play a role in the overall picture.Consider too that a contract only takes the parties to a settlement of agreements, if both parties agree all the way to settlement, there is no problem paying insufficient consideration as acceptance is made by closing the deal.

My settlement with the bank isn't public record, and the appraiser won't see what I paid for the other liens.

Not sure how your title company fills out the HUD-1, but with my title company, the settlement and closing fees (line 1102)($295 in your case) is carried "left of the line" and is rolled into Title Services and lender's title insurance (line 1101).