Proof of Funds Letter and Identification
Hello Everybody,
I need feedback on this question please. Im working with an realtor just to take a tour of some properties and I'm being asked to show POF and identification. We haven't signed a buyers contract agreement yet so why would I show my credentials when I'm not making an offer?
Can someone please explain if this is ok to do? I’ve worked with other realtors and didn’t have to show anything until an offer was made.
It's not an uncommon request. In fact, it's a fairly common brokerage policy.
Pre-approval or proof of funds shows that you are serious, willing, and able. You'd be surprised how many people will waste a realtor's entire weekend looking at houses with no ability to actually buy anything (or at least not anything they're asking to see). There are only so many hours in the week, and showing homes to unqualified buyers is simply a complete waste of time in many cases.
Asking for ID is a realtor safety issue. Realtors are often alone with potential buyers in vacant homes and remote locations. It's not unreasonable to ask you to verify your identity. Google "realtor murdered" and you'll be shocked by how many headlines pop up.
Thank you.
I dont show a property til we have a preapproval letter from a lender. And while I generally do not follow this part myself, I recommend that my team members also have a copy of the buyers photo ID before showing them a property.
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Proves you are legit
I find it easiest to do this
I find a house on Zillow I am interested in. I copy and paste the listing agents name into Google and add cel phone number to the search (Zillow gets in the way of texting the agent with the number they list)
I text the agent with the link to the house I want to know about. I also text a copy of my drivers license. A copy of my POF letter. And ask If I am interested would you be able to submit an offer for me?
I have found this works very well
Photo IDs are a safety issue. Here in Arkansas it is taken very seriously. Look up Beverly Carter's story to further understand why they ask for these.
A pre-approval or Proof of Funds just prove that you are a serious buyer. Any realtor who has been around for more than 45 minutes probably has a story about a buyer "wanting to look at houses" even though they had not intention or ability to buy one.
Thank you all for your feedback. Much appreciated.
Thank you
Selena
The world is full of scammers. I want to know that you are who you claim to be and that you have the money to spend. I also won't spend time showing you property unless we have a written agreement that I am the only agent representing you. I'm not going to spend all that time showing you houses, then watch you buy through another agent.
Thank you for your feedback. I truly understand where you are coming from. Scammers are definitely out there and very creative.
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#3 General Landlording & Rental Properties Contributor
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Well are you buying or touring? I would not show, ( I do not even email info on properties without a POF ) a property. Are you asking a realtor to just show you around or are you wanting to buy ?
Quote from @Bob Stevens:
Well are you buying or touring? I would not show, ( I do not even email info on properties without a POF ) a property. Are you asking a realtor to just show you around or are you wanting to buy ?
I’ve asked to take a tour of the property. Providing a proof of funds letter is not an issue at all. Because we didn’t have a buyer’s contract agreement, and I didn’t commit to buying the property, it just seems strange to asked for one upfront. What’s the difference if I was a buyer looking for a house to purchase, does a realtor asked for a bank statement to see if you’re able to purchase the home? I guess everybody does things differently. Still new to the game of real estate investing. Thank you for feedback. Much appreciated.
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Quote from @Selena Vinson-Jackson:Again, I will not even email a property without seeing a bank statement,
I’ve asked to take a tour of the property. Providing a proof of funds letter is not an issue at all. Because we didn’t have a buyer’s contract agreement, and I didn’t commit to buying the property, it just seems strange to asked for one upfront. What’s the difference if I was a buyer looking for a house to purchase, does a realtor asked for a bank statement to see if you’re able to purchase the home? I guess everybody does things differently. Still new to the game of real estate investing. Thank you for feedback. Much appreciated.
All the best
Sounds like to me the agent is just doing their job. Agents are not w2. The purpose of wanting the pre approval could be a lot of reasons besides the agent not wanting to waste time, but the self respect of their time is totally fair. You said you “worked” with other agents… what does that mean? You did a lot of showings? Did you close on anything or if I’m off, did you close with those agents but now you aren’t working with them?? I might misunderstand the intent here but if you have been going from agent to agent to go look at property, with no offers or offers accepted aka closings, the past agents and current agent are likely just wanting to protect their time. That is not to mention that by having a pre-approval letter with a reputable lender, an agent can feel better about their safety, since the persons credit was pulled and a minor background check of sorts took place. Really, it’s a fair request to be asked for a pre-approval as that person is possibly giving up their nights and weekends to help you.
Quote from @Selena Vinson-Jackson:
I’ve asked to take a tour of the property. Providing a proof of funds letter is not an issue at all. Because we didn’t have a buyer’s contract agreement, and I didn’t commit to buying the property, it just seems strange to asked for one upfront. What’s the difference if I was a buyer looking for a house to purchase, does a realtor asked for a bank statement to see if you’re able to purchase the home? I guess everybody does things differently. Still new to the game of real estate investing. Thank you for feedback. Much appreciated.
If you are claiming to be a cash buyer, then yes, most agents should ask you for a bank statement (or some other proof of funds, such as a letter from your bank) to prove it. Here are my main reasons why:
1. Let's say you love the house and want to make a cash offer today, after seeing it. A cash offer submitted without proof of funds will not be taken seriously by a listing agent or seller. There are too many "wholesalers" out there submitting what amount to fake cash offers trying to tie up properties with a contract in hopes of skimming an assignment fee on the deal. If we're looking at properties over the weekend (which is very common), waiting until Monday when your bank opens is sometimes too late. if you aren't willing or able to do this legwork in advance, you simply aren't a serious, qualified buyer.
2. I am not going to put my reputation on the line with my local colleagues (who I'll likely be doing business with again, and running into at local industry events or the country club or whatever) by claiming to have a cash buyer for their property when I submit an offer, when I don't know that to be true.
3. I am not going to show you $500k properties if you only have $300k cash (or a $400k preapproval) available. Your financing dictates what you can actually afford, which in turn dictates the properties you should be looking at. Sure touring multi-million dollar mansions can be fun, but it is not an income-generating activity when doing it with an unqualified buyer.
Bottom line: If you are serious about buying a property, you need to have the financing details (cash, or preapproval, or both) buttoned up and ready to go at a moment's notice. If you do not have these things, you are not ready to buy and should not be wasting an agent's time looking at properties.
You'll sometimes find a newer agent who hasn't learned these hard lessons yet who will show you properties (and to be fair, some experienced agents will show you one or two properties, and let those meetings sort of double as your initial consultation). But if your agent is not asking you for (or helping you secure) financing information, then they are doing you a disservice in the long run.
Thank for your feedback. Everybody have their ways of conducting business and it’s understandable. It’s good to see different perspectives on how people do business. Every agent is different. I’ve developed good relationships with the agents that I’m working with. They are helping me to obtain good investments properties for my end buyers. Have a great day!
I agree with you 💯. I take my business very seriously to understand what needs to be done so that I won’t be wasting my time and theirs. I’m learning a lot about real estate investing and yes, I’ve came across some scammers that supposed to be cash buyers investor and I spotted them out quickly. I appreciate your feedback. Have a great day!
Quote from @Selena Vinson-Jackson:
Thank for your feedback. Everybody have their ways of conducting business and it’s understandable. It’s good to see different perspectives on how people do business. Every agent is different. I’ve developed good relationships with the agents that I’m working with. They are helping me to obtain good investments properties for my end buyers. Have a great day!
So you are a wholesaler claiming to be a cash buyer? And someone called you out and put a stop to it by asking to see proof of funds?
There are legitimate ways around this: You can establish a partnership with a hard money lender who will provide proof of funds (and fund your deals) if you do not end up assigning them. And if your deals are really that good, you should want to close on them yourself if at all possible.
No one called me out. As I stated in my post, I can provide a proof of funds letter, it’s not a problem. I’m just seeing that every real estate agent does things differently. That’s all I’m saying. Take care
You're being asked for your credentials because (1.) the agent wants confirmation that you are who you say you are, and (2.) showing properties to potential buyers take time and resources. No agent wants to waste their time dealing with potential "tire kickers" or unqualified buyers.