Proof of funds letter to speak to agent

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Proof of funds letter to speak to agent

Bhanu Kuna
Investor · Hamilton, NJ · Member since 2013 · 49 posts · 9 votes

Hi everyone! I'm building my core 4 and contacted an agent and he asked for proof of funds letter before speaking. Can anyone explain what the purpose of the proof funds letter is at this point? What's the best method for getting the letter? I have 25k a can draw from my HELOC and few thousand in the bank. I think if I apply I should easily be able to get the letter.

Thanks! I'd really like to get a better understanding of the process.

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Guifre Mora
Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
6y
Originally posted by @Bhanu Kuna:

Hi everyone! I'm building my core 4 and contacted an agent and he asked for proof of funds letter before speaking. Can anyone explain what the purpose of the proof funds letter is at this point? What's the best method for getting the letter? I have 25k a can draw from my HELOC and few thousand in the bank. I think if I apply I should easily be able to get the letter.

Thanks! I'd really like to get a better understanding of the process.

 Get a new agent!

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  • Guifre Mora
    Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
    6y
    Originally posted by @Bhanu Kuna:

    Hi everyone! I'm building my core 4 and contacted an agent and he asked for proof of funds letter before speaking. Can anyone explain what the purpose of the proof funds letter is at this point? What's the best method for getting the letter? I have 25k a can draw from my HELOC and few thousand in the bank. I think if I apply I should easily be able to get the letter.

    Thanks! I'd really like to get a better understanding of the process.

     Get a new agent!

    2Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Simple way of weeding out people without funds.  

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    1Reply
  • Bhanu Kuna
    OP
    Investor · Hamilton, NJ · Member since 2013 · 49 posts · 9 votes
    6y

    Always super interesting to get the lender view & the agent view @Russell Brazil & @Guifre Mora :)

    I was trying to understand if this was normal process. I had the expectation I would have to get approval to purchase a property. I didn't think that I would need proof of funds just to speak to an agent. :)

    1Reply
  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    6y

    @Bhanu Kuna

    Well... it does go to demonstrate your seriousness to at least go through process. Put it this way: you need the PoF to put in an offer. NJ contracts have provision buyer represents they have enough funds to close. Also, many people really don’t understand financing so have wildly outrageous ideas of how much house they can afford. Also, even if they have purchased a home before, they aren’t necessarily that savvy so it may take days to week or more for them to get all the paperwork together for a loan officer to figure out what they can lend (ie people have lives and also not always “clean W2” salaries).

    While I work with plenty of clients who don’t have their financing set when I meet them (or day they do but can’t prove it), required PoF is important to make sure you aren’t wasting the Realtor’s time, or fall in love with a house you can’t afford.

    Case in point. I met a new client who was really pushy and arrogant. Wanted me to submit an offer without PoF. Said he knew his credit was excellent so I nor the sellers didn’t have to worry. He knew he could get a loan so it wasn’t any of our business. Blah blah blah... well, I compromised with him: I wrote up the offer that night (it was already almost 8pm when we saw the property) and he would at least get the ball rolling in the morning to get a letter... well, I got a message first thing in the morning that since he had an extension to file his taxes he couldn’t get a letter —- that was Aug last year. I called to follow up in a couple of days and he couldn’t talk because he was with his accountant. After four weeks of calling, he was still working things out with his accountant..... hmmm... had I submitted that offer I could have been in big trouble for misrepresentation.

    This is not the first case I’ve had, just the most glaring...

    PS oh, and having the letter also indicates what kinda of loan product you are using and if any concessions are planned. All important facts when searching for a property. All the govt backed loans have greater inspection requirements and time processing.

    1Reply
  • Jinglei Cui
    Saratoga, CA · Member since 2018 · 36 posts · 10 votes
    6y

    they want to select people to invest their time. It happened to me too, but after a while when they get to know you and your capacity, they wont care 

    1Reply
  • Bhanu Kuna
    OP
    Investor · Hamilton, NJ · Member since 2013 · 49 posts · 9 votes
    6y

    @David M. I can completely relate to those who value their time! It actually made me like the guy more haha. I appreciated that he had his own list of requirements for who he would work with.

    0Reply
  • Bhanu Kuna
    OP
    Investor · Hamilton, NJ · Member since 2013 · 49 posts · 9 votes
    6y

    @Jinglei Cui good to know. I'll work my way through the proof of funds process with a few lenders so I have options.

    0Reply
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