earnest money just to make an offer

7 Replies

Hey BP, an agent found me a decent deal here in Los Angeles for a buy and hold.  I told her I wanted to make a cash offer.  She started asking me to see my bank accounts, etc... My question is, is this standard just for making an offer?  She said I needed to show a bank statement with 3% of my offer price.  Before I do this I wanted to come to the Forums and get more information.  Is this the agent trying to figure out if I'm legit or is the standard procedure just to make an offer on a property.  I don't get why she can't just make a verbal offer, being that I'm offering well below asking price, just to get a feel for if they might say yes.

When you make an offer you can show proof of funds so the knows you are serious.  Normally people show bank letters showing they are pre-qualified as proof of funds but if there is no bank they want to know you can close and not waste their time is all.

It is legit. It is called" proof of funds". Have your bank write a letter on their letterhead stating that you have $XXXXX in the bank. You do not want to show your hand by letting the seller see you entire balance.

They are making sure you are serious about the purchase, saying you will pay cash and being able to afford to pay cash are two different things. You are purchasing it for well below asking, they have to go to the table, with the seller and their agent, knowing and pushing that you are a serious buyer and can do the deal in order to get it for your offer. It would be normal for them to ask for something like a copy of a bank statement to back you up.

@Mel Hayes

Put yourself in your agent's and the listing agent's shoes.  They both want to know if you can perform so that they aren't wasting their time.  Your agent might know you well enough to know you can buy all-cash, but the selling agent certainly doesn't know anything about you.  I don't really get the previous comment about bank wire... sounds like a lot of work.  

I also don't agree with "showing your hand". You want the seller to see that you have the money and you're not some random idiot wasting time. I just bought 2 properties for cash this month, sent bank statements, line of credits, etc. that equated to WELL over 5x what the purchase prices were on the properties. They need to know that I am a professional and not just some kid messing around with a tight budget who "needs a low price because that's all the pennies i've saved up!". You make your low offer with logic backing it up (such as ARV minus rehab minus your profit) as a professional investor, not because you can barely afford it.

Just take a screenshot of your online bank account page showing the balances, or the HELOC statement showing enough limit in there to purchase and send that to your agent. They work just as well as any official document and you don't have to jump through hoops or pay for an official wire or whatever. Keep it simple!

As for the verbal offer from your agent; generally that is a waste of time.  Unless your agent personally knows the other agent - maybe they are in the same office or they have worked together in the past - then verbal offers don't make sense.  It takes only a few minutes to write up an offer, even less time because it is all-cash and less than 10s for you to click through eSign and have it sent back.  Once you have the first offer in, if they decide to counter they may do verbal back and forth until you reach an agreement, but I've never seen someone go verbal from the get-go unless they have a personal relationship already.

I hope this helps, best of luck with your purchase!

Originally posted by @Mel Hayes :

Hey BP, an agent found me a decent deal here in Los Angeles for a buy and hold.  I told her I wanted to make a cash offer.  She started asking me to see my bank accounts, etc... My question is, is this standard just for making an offer?  She said I needed to show a bank statement with 3% of my offer price.  Before I do this I wanted to come to the Forums and get more information.  Is this the agent trying to figure out if I'm legit or is the standard procedure just to make an offer on a property.  I don't get why she can't just make a verbal offer, being that I'm offering well below asking price, just to get a feel for if they might say yes.

 They are trying to distinguish you from the 20 other people out there that claim to be cash buyers, but that in reality are scammers, wholesalers who do not themselves have the ability to close, applying for a hard money loan that may be rejected at the last minute b/c the HML doesn't like the neighborhood, people doing jenky unreliable guru stuff, etc.

If you're getting a great price on the property because you're a cash buyer, this is what the agent needs to present to the seller to sell the discounted offer. 

Originally posted by @Chris Mason :
Originally posted by @Mel Hayes:

Hey BP, an agent found me a decent deal here in Los Angeles for a buy and hold.  I told her I wanted to make a cash offer.  She started asking me to see my bank accounts, etc... My question is, is this standard just for making an offer?  She said I needed to show a bank statement with 3% of my offer price.  Before I do this I wanted to come to the Forums and get more information.  Is this the agent trying to figure out if I'm legit or is the standard procedure just to make an offer on a property.  I don't get why she can't just make a verbal offer, being that I'm offering well below asking price, just to get a feel for if they might say yes.

 They are trying to distinguish you from the 20 other people out there that claim to be cash buyers, but that in reality are scammers, wholesalers who do not themselves have the ability to close, applying for a hard money loan that may be rejected at the last minute b/c the HML doesn't like the neighborhood, people doing jenky unreliable guru stuff, etc.

If you're getting a great price on the property because you're a cash buyer, this is what the agent needs to present to the seller to sell the discounted offer. 

 Thats a great way to look at it.