Question: Proof of Funds for Cash Offer
Denver, CO · Member since 2017 · 7 posts · 2 votes
Question: Proof of Funds for Cash Offer
Most Popular Reply
Originally posted by @Matt P.:
I send my bank account statement with my cash offer, account number redacted of course. In your situation if your approved through a hard money lender they should be able to get you something showing that. Good luck.
FYI... if you've ever written a check........... it had your account number on it.
40 Replies
- 8yDave Van HornPro MemberFund Manager · Wayne, PA · Member since 2009 · 1k+ posts · 1k+ votes
They're asking for proof that you can close. You should be able to obtain a proof of funds letter from the hard money lender.
- Harpers Ferry , WV · Member since 2018 · 35 posts · 10 votes8y
Same this as a prequal letter. The hard money lender should be able to give you a prequal letter, or you can ask your bank to give you a letter stating you have that amount in your accounts (they always act like its the first time they have ever heard of this but they will do it)
Originally posted by @Matt P.:
I send my bank account statement with my cash offer, account number redacted of course. In your situation if your approved through a hard money lender they should be able to get you something showing that. Good luck.FYI... if you've ever written a check........... it had your account number on it.
@Matt Inama For a cash offer, simply include a printout of your bank statement or account summary showing you have the funds in your name required to close.
On the other hand, if the funds are coming from a hard money lender, you should really be submitting a financed offer along with a pre-approval letter from the lender.
- Real Estate Broker · Aurora, CO · Member since 2018 · 17 posts · 14 votes8y
Ask your bank for a proof of funds letter. You'll also need documentation from the hard money lender staying that you're pre-approved. A pre qualification letter means nothing to listing agents or here so make sure it says pre-approval specifically.
May I ask why you're contacting listing agents yourself? A buyer agent to represent you does not cost you anything. The seller pays the commission.
My number and email are below and I'm a broker here in the Denver area. Feel free to shoot me an email or give me a call. I happy to help answer questions.
- Contractor · Pensacola, FL · Member since 2017 · 322 posts · 157 votes8y
Thing is you're not really offering an all cash deal. If you want to differentiate yourself from a traditional mortgaged deal then perhaps you should say you are privately financed and approved, then supply the letter from the HML.
- Denver, CO · Member since 2017 · 7 posts · 2 votes8y
Thanks for the feedback so far, everyone! I see now I need to clarify a bit. I was always under the impression that it's best to have a property under contract before approaching private investors and/or hard money lenders. With that in mind, I do not have money in my bank account, but am confident I can raise the money through private investors and hard money lenders as a last resort. How can I approach it then if I don't actually have the money in my bank account or have a relationship with a hard money lender yet?
Originally posted by @Matt Inama:
Thanks for the feedback so far, everyone! I see now I need to clarify a bit. I was always under the impression that it's best to have a property under contract before approaching private investors and/or hard money lenders. With that in mind, I do not have money in my bank account, but am confident I can raise the money through private investors and hard money lenders as a last resort. How can I approach it then if I don't actually have the money in my bank account or have a relationship with a hard money lender yet?
So let me get this straight. You:
-Think you are making a cash offer when you really are not.
-Somehow now you say you thought you were supposed to get a house under contract before getting financing lined up. Which makes zero sense, as I can guarantee you if anyone approached me this confused, I wouldn't even give them the time of day. Why would I tie my million dollar home for example, up for weeks while you try to figure out what you are doing, not to mention obtain financing for what you told me would be a cash offer….
None of what you say makes any sense, and I highly suggest if you're struggling this much with the basics that you read up a bit more before proceeding further....You're either going to get scammed or end up in a bad deal/situation.
When I bought my first house at 26 paid in cash, it was noted as a cash offer in the contract. There was no financing contingency. The bank wanted proof that I had the cash to pay in full. I sent them a redacted copy of my bank statement. THAT simple.
Originally posted by @Jeremy England:
Thing is you're not really offering an all cash deal. If you want to differentiate yourself from a traditional mortgaged deal then perhaps you should say you are privately financed and approved, then supply the letter from the HML.
Yeah I don't think he understands that he isn't offering a cash offer. He is getting financing. It sounds like he has little or no money of his own to show for an offer. I really think he needs to read a bit more before proceeding further in investing or he will get scammed and waste a bunch of peoples time.
I had an "investor" once who claimed they had the 200K DP for my house, etc. All of a sudden it turned out to be an inheritance/gifted money/whatever. Wasted 3 weeks of exposure on the MLS, during the most critical first weeks of the listing...I was livid. Sounds like he is going to waste a lot of peoples time with this.
Originally posted by @Matt K.:
I'm not the one redacting my account number....
I redact my account number on bank statements too. Yep, I too know the account number is at the bottom of my check, but 1) that doesn't mean I expose myself to needless risk by just throwing my account statement to a bunch of low barrier to entry people involved in real estate transactions and 2) I have a separate business checking account that I use to write checks such as when refunding tenants deposits, etc. That account has very little money in it. But go ahead and just post your account number for all of us here to see since by your logic, it's on the bottom of your check anyways so why does it matter....
But what do I know, it's not like I'm a self made millionaire or anything.... ;-)
Oh, and by the way, the oldest man alive had hundreds of thousands of dollars stolen out of his account because they had his bank account number and were able to use it to buy assets. In fact the reason I have a business account separate from my own is because I was concerned about this when I first started investing years ago, and I went to the bank and they told me I was right to be concerned, since you can use the account information and name on the check to buy assets.
I think we can both agree, that sending proof of funds.... likely to the same people you're going to wire or write a ED check to is little different than posting the account number to a public form.
However, with that said please explain to me the risk because I don't get it. What exactly is someone able to do with my account number (in the context of submitting an offer/proof of funds, NOT posting to a public site).- Contractor · Pensacola, FL · Member since 2017 · 322 posts · 157 votes8y
Originally posted by @Matt Inama:
Thanks for the feedback so far, everyone! I see now I need to clarify a bit. I was always under the impression that it's best to have a property under contract before approaching private investors and/or hard money lenders. With that in mind, I do not have money in my bank account, but am confident I can raise the money through private investors and hard money lenders as a last resort. How can I approach it then if I don't actually have the money in my bank account or have a relationship with a hard money lender yet?
There are a few options. Just offer financed deals. Get a preapproval froma mortgage broker and use that to make offers. If you are trying to make it attractive to sellers then remove contingencies if you are confident it is a good deal.
Use the cash you have and shop for cheaper properties.
These are for MLS properties
For off market properties, no such proof of funds would be required. If you get a deal, then you could bring on a partner or a private lender.
Buy a list of out of state high equity owners and send them a letter or post card. Repeat as necessary. When you get in front of one, pitch an owner financed deal.
- Flipper/Rehabber · Salt Lake City, UT · Member since 2016 · 211 posts · 174 votes8y
You can get a statement from hard money lender for the amount, but make sure you waive the subject to financing clause, otherwise you are financing and more than likely will create a bad name for investors when you potentnially fail to raise the funds.
Totally off topic but with an account number someone was able to pull 9k out of my wife’s checking account by doing an online transfer. It was from A new house cleaner than my house cleaners used and we suspect she took a picture of our checkbook that was in a drawer since no checks were missing. Had to file a police report and wait like 6 weeks for the transaction to be reversed.
Then, every loan we took for the next year or two wanted to know where the large deposit (refund) came from and we had to submit copies of the police report and statements for it.
Major pain in the butt. It’s very easy to do an electronic debit to someone’s account with the numbers.
While it’s true that anyone you write a check to hypothetically can do this and it’s impossible to never write a check, it’s probably smart to limit how many people you share account numbers with. It only takes one.
Edited: I was curious so I reread the police report I have saved: it was actually $15,500 taken via a ACH payment
- Vandalia, MI · Member since 2018 · 569 posts · 264 votes8y
SO here is my 2 cents worth, find a deal, do you due diligence making sure it is a positive cash flow for you, then put it under contract for a closing date a month away or longer if you wish to find financing. If that is accepted find a hard money lender and apply or start their process. They will need a bunch of information and you can not redact anything when sending them what they want. (sorry, I just had to be funny!) Then if they think it is a good deal they will give you an LOI (Letter of Intent). This you take to the seller to show that you are getting the financing. The hard money person will want an appraisal and some of them make you use their people so do not get an appraisal until they ask you to and give you whom you have to go through. After that appraisal comes through the lender will decide all the particulars of the loan and give you a term sheet. Then you can decide if you like the term sheet and if so get ready and sign the loan at closing. Do not forget you have closing cost to come up with some hard money lenders go from 2.5 % to 15% on closing costs. You must have that money in cash to do the loan or get a bridge loan and pay that back out of the main loan(most won't like that idea.)
ALl the while you will need to have skin in the game also so your LTV will have to be between 60/40 to 80/20 depending on your credit.
Bottom line if your credit score is 750 and above you should see something at an interest rate of 5-7 percent with a 80/20 LTV, and closing costs around 5 points. If any of this is rambling let me know.
Hope I helped you out. If you have more questions let me know.
Originally posted by @Mike V.:
Totally off topic but with an account number someone was able to pull 9k out of my wife’s checking account by doing an online transfer. It was from A new house cleaner than my house cleaners used and we suspect she took a picture of our checkbook that was in a drawer since no checks were missing. Had to file a police report and wait like 6 weeks for the transaction to be reversed.
Then, every loan we took for the next year or two wanted to know where the large deposit (refund) came from and we had to submit copies of the police report and statements for it.
Major pain in the butt. It’s very easy to do an electronic debit to someone’s account with the numbers.
While it’s true that anyone you write a check to hypothetically can do this and it’s impossible to never write a check, it’s probably smart to limit how many people you share account numbers with. It only takes one.
Edited: I was curious so I reread the police report I have saved: it was actually $15,500 taken via a ACH payment
First, this was you think it was a house cleaner who took a picture of your check........ again a far cry from realtor/home owner you are making an offer on. It actually literally had nothing to do w/ a check other than someone taking a picture of it.
Second, having had to explain a deposit it's a pain but not that hard... we're talking a letter and in your case a copy of the police report.
Third, what lenders are you using that go back a "year or two"... most go back a few months.
And for the reason I am asking why people redact the account number for proof of funds.....it's equally likely they are nefarious and are using an account that's not theirs. I get bad people exist, but in the context of business transaction it's slightly different... again seeing as if you're serious about the offer you are most likely going to wire or write a check anyways.- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Matt P.:
I send my bank account statement with my cash offer, account number redacted of course. In your situation if your approved through a hard money lender they should be able to get you something showing that. Good luck.when I print my statement from my on line banking it automatically redaksthe # just the last 4 are visiable.
but then would not take much work to figure out routing numbers I guess.. but either way that's your best proof then everything else is just lender approvals. which normally work I know they work for the auction houses.
for me as a seller and we sell a lot of property in the hundreds of homes per year that we own.. I look very closely at any HML letters and we follow up on those as so many are fake lenders.. then this one lender in Texas who I see them on this site occasionally.. I want pof from buyer who was using it.. and they sent over a copy of their Client/rehab trust account which did have a few million in it.. but that's no money to make new loans LOL.. I told them try again.. :)
1. I don’t see your point about it being a house cleaner vs a ‘possible’ home purchase transaction. People are opportunist. It seems like common sense... the fewer people who see your account numbers the less likely it can be stolen. Can a homeowner, realtor, escrow officer, not be dishonest or have their laptops stolen with the info saved on it? I can find a dozen ways it could end up in the wrong hands even if everyone involved in the transaction are honest upstanding citizens.
2. there’s no way to avoid sharing info when you get to that point in the transaction. My only point was that anytime you can avoid sharing account numbers it’s probably safest if you do. I have had transactions go to sh*t after sending proof of funds. Also, When you submit proof of funds with an offer you’re sending it to the realtor.
Every transaction I’ve done I’ve wired the money directly to an escrow account. Redacting it eliminates the realtor / seller from ever having it in the first place.
Originally posted by @Matt K.:
Originally posted by @Matt P.:
I send my bank account statement with my cash offer, account number redacted of course. In your situation if your approved through a hard money lender they should be able to get you something showing that. Good luck.FYI... if you've ever written a check........... it had your account number on it.
What if you don't keep your dry power in a checking account...
In a business transaction it is entirely reasonable and normal for account numbers to be given out. This isn't like you're posting it on a public site or some random email you got from craigslist.
AGAIN, IN A BUSINESS TRANSACTION..... plus like Jay said, when you print out the account summary you only have the last 4 of account, rest is already redacted. Routing numbers are all listed on the banks sites already...
I just double checked my Wells Fargo account, literally pulled my last month statement and it fully lists every account number I have in my PMA accounts. Nothing is redacted. I love the idea of it being redacted and if they are redacted for your statements then we’re saying the same exact thing in different ways.
I am not a mass flipper and haven’t purchased 100s of units. I focus on LARGE transactions, typically 1m+ with finanancing. They all deal with an escrow account. It would be very UNUSUAL for anyone besides the escrow officer to see this information. I would consider this a BUSINESS TRANSACTION.
Perhaps this isn’t the case all the time. Just my experience.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.