Proof of funds: too much money??

8 Replies

Hi BP forum, 

Getting ready to make an offer on a residential property and seller wants proof of funds. I have 35% saved up for downpayment/closing, etc. Are there any downsides to showing the seller that I have this amount of money sitting in a bank account, when it comes to my negotiating power?.... An identical property sold for much less than list price 2 mo back, so I'm hoping to negotiate down to at least close to that. Any insight is appreciated. Thanks in advance!

No. Some disagree, but it shows you are more capable and have a better chance of closing. I had customers showing over $1M buying $150k properties. Just because you Have more doesn’t mean you’re willing to Pay more.

I would suggest now show like the full 35%. Show maybe 22% or 25% if you are putting 20% down. Also, proof of funds should be the last stage when you have already negotiated the price based on the pre-approval. 

Originally posted by @Wayne Brooks :

No. Some disagree, but it shows you are more capable and have a better chance of closing. I had customers showing over $1M buying $150k properties. Just because you Have more doesn’t mean you’re willing to Pay more.

 Completely Agree with Wayne

POF I see usually for a cash purchase. If you only have 35% of the purchase price, you wouldn't show POF you would show pre-approval/pre-qualification from your lender. Unless I am missing something.

@Mitra Samon

There are advantages and disadvantages showing too much money or too little. The answer is depends on the market. 

In a highly competitive market, like SF Bay area, the more the better due to a highly competitive market. If you show just enough, then there are others who show way more and can influence the seller in a bidding war or multiple bids. In this type of market, better to go all in and show your hand (POF).

In a non competitive market, where buyers are few and far between, then might try to show just enough and make seller think that is all you have. This might sway the seller, but this means leaving on market for longer period of time, where another buyer might swoop in.

Overall, If you have funds in multiple accounts, they can piece together enough to cover and a bit more. However, If you have an account with one lump sum, then just show lump sum.

Terry

Thanks to all who replied. Looks like its leaning on the side of no/low downside to showing (excess) POF.

-The offer is on a vacant lot being sold by original developer

-I'm going for a Construction Perm loan, so I hv 30% + closing costs saved up for the entire CP loan

-the next lot sold for 75% of list price, so I want to keep my negotiating power 

-I dont want to get a pre-approval letter since I dont want my credit pulled this early. My regular bank has informally pre-qualified me but cant give a letter w/o credit pull. I want to go to the banks only after my offer is accepted.

Appreciate the insight!