Should I provide Proof of Funds without a deal?

Question

I'm trying to break into a new market, so I don't have any track record there. I've heard that some commercial brokers will ask for a proof of funds before they even show you a deal, if they don't know you.

Are there any compelling reason why I should or should not provide a POF (if requested) as part of my credibility kit? Whenever I provide POF as part of a deal, I always blank out my account number and mailing address.

Thanks!

James

Jonathan Greene · Answer

@James Kojo - You should be giving an updated proof of funds with every offer to beat all the other who don't or won't due to "privacy concerns." If you want to buy houses for cash you want to let people know you have the money to do so. As @John Hickey said, once you show them that you are serious, they will come to you. You have to be as transparent as possible and that will help everyone know that you come through and you have the cash to close quickly.

On the agent side, when I am a listing agent and I request a proof of funds for a cash buy and there is any push back, we don't even look at the offer because a cash offer without a POF is not an offer, it's a piece of paper. As a buyer's agent for my investors, I ask them for a proof of funds up front, before I start doing all this work finding foreclosures and off-market opportunities and using my resources to help them. I need to know we are in it together and that when I call with an off-market property in their desired area with a solid ARV, they will be ready with funds to show up and close.

Matt Roach · Answer

@James Kojo

I'd call up a broker in the area that you are interested in and explain what you're looking for. Ask for a recommendation of a local lender that you can then get a prequal letter from and better understand your limitations with financing. I highly recommend using a commercial lender local to that area, as the broker and seller will feel much more comfortable knowing that it has a higher probability to get funded.

I'd start looking at what is available and try meeting a broker at their office (if possible) to discuss specific properties further. This will start narrowing down your parameters to then setup property tours. I will mention on smaller properties, you may not be able to tour a unit before an LOI - however on most deals over $1-$2m+ it is common occcurance to have a formal property tour.

I would also look into who will manage your property. Making sure your ducks are in order and being responsive is the best way to build credibility with a broker.

Matt Roach · Answer

@James Kojo

I am a multifamily broker out of Phoenix. One of the first things I ask any potential buyer, as a way to screen them is there experience and a proof of funds. If someone wants to black out their information for privacy, it wouldn't matter to me - as long as there is available funding for a deal.

One of the quickest ways to get a bad reputation as a broker is bring an unqualified buyer to the table and waste everybody's time.

Karen Schimpf · Answer

@James Kojo, If you feel uncomfortable providing the Realtor with bank statements to show proof of funds, ask if it would be acceptable for you to provide a pre-approval letter from a lender.  The lender will also ask for your bank statement to prove you have the funds for a down payment and reserves but at least you will know you would qualify for a commercial loan.

Chris Mason · Answer

Schedule E with addresses and your SSN blacked out. To show the listing agent and sellers that you have landlord experience (which commercial lenders really care about) and are more likely to be able to get the commercial loan, unless of course you are a cash buyer.

Michael Plante · Answer

I would not wait to be asked

I would provide proof of funds along with your offer

James Kojo · Answer

@Matt Roach Thanks for the perspective from a commercial broker's point of view.

I guess the consensus from this thread is one should provide POF if requested.

Do you have any other suggestions for building credibility with a broker if I don't have a MFR track-record? all of my transactions have been SFR.

Thanks!

James

Antoine Martel · Answer

James.

Always black out your account number and address. Wouldn't stress about commercial brokers asking you for this information upfront. Unless you're doing super large deals over $5M then sure maybe they'll ask to see some proof of who you are.

If you don't feel comfortable then don't show them.

Where are you looking to do deals?

Should I provide Proof of Funds without a deal?

Most Popular Reply