Proof of Funds Dilemma - Please Help!

[Joshua Durrin]

I've been taking some aggressive action in my market at the advice of BP and others. I found a property that, when repaired, could be worth conservatively $600k. It's a Victorian style triplex with a 4 bd master unit and two 1bd smaller units perfect for a family to offset their expenses and enter into the investment realm.

I submitted an offer for $421k all cash (thinking hard money loan as a last resort). I submitted the offer in such a way that would allow me to wholesale it or to work with an equity partner too. I have about $30k I can QUICKLY bring to the table myself plus my experience as a broker, project manager, and engineer.

The seller contacted me a moment ago requesting a proof of funds.  I included a letter with the offer, mind you, that it was likely going to be a partnership between myself and another entity in my network and informed her in the letter that these partnerships are often times formed once the property is in contract. To address her immediate question, however, I told her I would reach out within my network and see if my partners could produce a proof of funds letter.

The property is in need of extensive repairs, by quick (drive-by) estimation about $80k. My offer includes an appraisal contingency as well and a few other ways to back out once due diligence is completed should we find the repairs are more extensive than guestimated.

Do you have any advice on how I should proceed or perhaps handle the conversation with the seller differently? Feels like I'm in a catch-22... can't find equity partners without a contract in place... but can't get a contract in place without a proof of funds letter. How do I go about handling this dilemma? Thanks again for the help and counsel.

[Ned Carey]

You and other wholesalers won't like what I have to say. 

Sellers ask for proof of funds, to know that the property is going to be sold for sure. You don't know that. You don't have a buyer, you don't have funding. So essentially you are asking how do I deceive the seller. 

You have $30K to put down. If you are sure this is a deal why not put it all down as an earnest money deposit? Frankly I am not sure it is a deal given you off the cuff numbers.

Yes to some degree this is a catch 22. But get your ducks lined up first. Find some buyers that you can work with in a situation like this ahead of time.