Oakland, CA · Member since 2014 · 51 posts · 4 votes
I do not have the intention of this, it simply came up in a conversation with a new wholesaler. I also am not referring to POF "Letters", I am aware of how those work. Just would like fellow agents/investors opinions on this.
An agent is requesting a copy of your bank statement before allowing you to view a property, just a basic viewing. If you altered the statement digitally to show more funds, and faxed it over to the agent, is it technically violating any law? As you are NOT yet doing any transaction or business. It simply was to view a property. Thus, is it nothing more than a photoshopped image in that scenario?
Many of the investors I know do not like to release ANY bank information to agents and certainly not to someone that happens to have a house listed. If there is ever a question if they can close or not they simply do a cashier's check for earnest money for the full price.
@Jay Hinrichs, I completely concur with you regarding wholesalers. With this scenario however, I don't believe wholesaling was actually ever mentioned. I believe the investor had arranged to buy it directly and pay the "wholesaler" a chunky finders fee. No selling or exchanging of contracts.
@Paul Bowers This was a vacant house, the seller had already moved out.
At the end of the day, it was just a bad agent. It was vacant, there was no wholesaling, the agent was familiar with the investor, etc. It's just one of those deals you have to walk away from and not squander your time on.
One option is to just submit an offer to them contingent on getting to view it. By law, the agent is forced to present it to the owner, and the owner may then direct the agent to show the property.
(That's if the investor was willing to do so. Sounds like not.)
That's fraud. It may not be pursuable as it's inchoate until acted up.
So let's say you view the property, tie it up, waste their time and thus money based on a false POF letter that they reasonably and detrimentally relied upon, then you are now guilty of actionable fraud.
Interesting. So without looking or financials how do you decide how much to offer? I am a newbie to be sure, but I don't see how you can make a enforceable contract offer blind?
And there is a lot of risk to the seller because if they get to the inspection and walk away (through contingencies) then you have to start over again without even the earnest money.
I was most certainly not a cash buyer, so maybe hot markets are just not my cup of tea. Back to syndication for me.
@Paul Bowers definitely could be on to something. If it's a potential wholesale/fix and flip kind of deal I can't imagine it rises to the need of a proof of funds, if it's a tenant issue I definitely want to pre-qualify because tenants are usually the least accommodating spoke in the wheel.
From an agents perspective I'll tell you my take. If you are not represented by another agent, that means I have to show up at the property. 10 minutes is not accurate when you consider driving time. Plus if you're calling me out of the blue and want to see it say within the hour you're interrupting my day and my plans to accommodate your immediate needs. I can't tell you how many times I've got in the car (usually from a buyer call) and wasted my time. Buyers want to see the home now, but when you start probing for qualification or find out if their working with another agent I get stonewalled or they never return my call after the initial showing. It's frustrating to say the least, but I do it more often than not because out of 10 potential buyers I will pick up a few of them, so it's worth it. I know plenty of agents that refuse that model.
If you are in a hypothetical situation then it would make sense to work out a proof of funds letter from a bank up to a certain amount and have that ready to go. If the wholesaler/buyer are really serious they know sometimes this is going to come up so why not just put it in place. That way when you call an agent and ask to see a home you have it ready and it virtually eliminates the agents resistance.
Some food for thought: Never try to sell yourself on the call, let the agent control the conversation and answer with honesty. If you're a qualified buyer (proof of funds) I would have no issue showing you a home. You also could be a little respectful of their time and even ask them when it's convenient for them. They may just have the next morning open on their schedule but may get really irritated if they have to do it now... who knows they could be working on a market analysis for a million dollar listing.
John Nachtigall not saying there is anything wrong with you wanting all that DD before an offer but it's buyers like you (again, don't mean that in a bad way) that allow buyers like me to buy things under market.
If you know what the price should be you don't need to view the property (maybe google street view + a few pics) or see financials.
I get properties under market all the time because brokers know they can send something with hair on it my way and I'll buy as-as without needing anything.
Sure there are funky things to fix but if the price is good enough, and you go in expecting flaws, you're easily covered.
@Mike Miller the more i thought about your original post the more confused I got. There's been a lot of discussion about whether people would give proof of funds to see a house but that wasn't the actual question. You wanted to know if if was okay to give fraudulent proof of funds. Why bother? If you don't have the funds available why look at the property? If you actually have the funds and think the deal is worth it why not just show the legit proof and proceed?
@Mike Miller - thanks for posting. I'm with @Paul Bowersthis may have been a case of seller's agent, seller's rules. And as for doctoring financials, I don't know about California licensing laws, but I'd bet misrepresentation is a punishable offense.
@John Nachtigall, it makes sense and is absolutely commonplace for sellers to require an accepted offer before allowing a walk through of occupied units. Not only is Quiet Enjoyment a legal construct, it is also hard to accomplish with every tire kicking lookie-lou trouncing through the place. Same with financials which, though necessary due diligence, is no one's business but an actual buyer's.
We have a broker around here that puts the buyers agent commission at 2% and requires the full names and full financial qualifications before any showings are allowed on any properties. This of course is not to represent a client, it is because he does not want any help selling properties in his area (Wants both sides on every deal). So if someone has an agent he would rather they leave than come put an offer in. Not how my business is run personally.
As far as a fake POF or a false document, not how my business is run either.
@Cody L. you are absolutely right, buyers like me do allow you to purchase under market.
- Risk comes from not knowing what you're doing. Warren Buffett
I am still in the "not knowing" category. I think I am better taking risks in other parts of real estate, which is super cool, there is plenty for everyone.
I appreciate your logic, but if you were my agent what would you suggest I offer? This would be based on the listing alone mind you. Does everyone just offer list price and the negotiation happens after diligence, because that seems bad for everyone. I get that it is inconvenient, but so is automatically having to sign a contact to buy just to inspect the merchandise. I am honestly curious, what do you tell your clients to offer?
@John Nachtigall - great question. I say a combination of the following, "As long as we're operating in good faith, I am obligated to represent your best interests and submit any reasonable offer. This said, keep in mind the sales to list price ratio in this market is at 100%, sometimes more and has been since April 2016. I can't tell you how many offers I've submitted above asking price and lost. Our offer will include Inspection, Due Diligence Periods and other safeguards which will allow you the opportunity to terminate with cause and protect your earnest money. How would you like to proceed?"
In my opinion, regardless of a physical contract, you've entered into a business relationship by agreeing and not to do or perform certain items. To provide a fake POF in my opinion is a form of fraud... but I am not an attorney so what do I know. :)
I do not have the intention of this, it simply came up in a conversation with a new wholesaler. I also am not referring to POF "Letters", I am aware of how those work. Just would like fellow agents/investors opinions on this.
An agent is requesting a copy of your bank statement before allowing you to view a property, just a basic viewing. If you altered the statement digitally to show more funds, and faxed it over to the agent, is it technically violating any law? As you are NOT yet doing any transaction or business. It simply was to view a property. Thus, is it nothing more than a photoshopped image in that scenario?
The agent is making sure you are a qualified buyer before he spends his time (which is money) on you.
Legal rammifications or not, how do you feel knowing you are lying to someone who is just trying to make a living & or feed their family? To me this shows that you have poor character & lack common courtesy in your business dealings.
@Mike Miller I'm not an attorney, but that doesn't sound illegal. Disingenuous, sure, but not illegal. If you submitted that altered PoF with an offer that a seller would be making a decision off of, then that's a very different story.
The real issue here is with that agent. How much of a prick do you have to be to demand a copy of someone's bank statement before you show them a flippin house? Simply as a matter of principle - and speaking as an agent myself - I'd alter the hell out of my bank account if I were in your shoes. That agent is his own worst enemy. /end rant
If you build your business the right way you will eventually be in a position to screen potential clients as well. The ultra successful agents pick & choose who they work with.
The life cycle of a successful agent moves from grabbing any client who will work with them to doing entry level screening of all clients to eventually outsourcing all buyer showings to team members.
A POF before meeting a buyer at a property is simple entry level screening. Anyone making serious money in the industry MUST screen buyers before showing them properties. If you are not yet at a point in your business where this practice makes sense you need to spend more time working on your marketing.