Proof of funds required?

19 Replies

Is proof of funds required to simply submit offer?  

I've submitted two offers in the past and was never asked for it. I was told it would only be required if the offer is accepted and the bank/owner wanted to move forward. (the offers weren't accepted)

I wanted to submit an offer on a new listing yesterday, but for some reason the listing agent refused to do it without proof of funds. She says the bank won't accept it.

The entire listing is just weird. The house is listed for a certain price, but the listing agent says it's going up for auction. However, there is no information about said auction available. She also said that submitting an offer before the auction for the full list price would stop the auction "usually"?

My thing is, how are you going to require proof of funds just to submit an offer, but you're planning to sell it at auction to random bidders with no way of verifying their funds before they bid. Completely illogical. The price of the house isn't even that much.  Just 15k.

I'm not a realtor or an investor I'm a normal person looking for a place to live, and I feel lost. The agent did a poor job of explaining things. I'm need advice about how to proceed on this. Although I'm sure by the time I figure this out the property will be sold already. :(

Not required but certainly helps your chances and makes your offer look stronger and more legitimate.

I agree with other comments. We have submitted several offers without a pre approval letter from a bank or showing proof of funds. It s a good idea to just provide one or the other to make sure your offer is strong in the eyes of the seller.

@Mike Jones If you submit an offer, the listing agent is required to present the offer to the seller. However, if they are asking for proof of found, the seller will likely just reject your offer. But either way, the listing agent has to present your offer no matter what the offer is. They cannot "screen" the offers. All offers has to be submit to the seller.

Also note, if they are asking for it, and you really want the property, then do what they are asking to make your offer stand out. Usually not providing those items indicates that the buyer is not serious. 

For auctions, you usually need to have proof of founds (cash or cashiers check) to register for the auction.

Originally posted by @Jiri B. :

@Mike Jones If you submit an offer, the listing agent is required to present the offer to the seller. However, if they are asking for proof of found, the seller will likely just reject your offer. But either way, the listing agent has to present your offer no matter what the offer is. They cannot "screen" the offers. All offers has to be submit to the seller.

Also note, if they are asking for it, and you really want the property, then do what they are asking to make your offer stand out. Usually not providing those items indicates that the buyer is not serious. 

For auctions, you usually need to have proof of founds (cash or cashiers check) to register for the auction.

 That's after the winning bid. Not before the bid. You can't provide proof of funds when the sum isn't determined yet. 

Which is my point, it makes zero sense to not allow me to place an offer without proof of funds when you're going to put the property up for auction with zero proof of funds required to bid.

I really don't have a problem providing proof of funds, it's just the logistics. 

1. My bank does not have a local branch in the state. Getting a written statement from them will take time, as well as depositing some cash I have on hand.

2. Showing them the amount of funds I have in my account may trigger a higher counter offer. 

3. They might may not accept my offer regardless.

Seems like a backwards way of doing things and a major inconvenience for the buyer. In my opinion it has nothing to do with weeding out buyers who aren't serious, it's just a negotiation tactic. It makes much more sense to request such sensitive information after you have decided to move forward with an offer.

It's really sad, because I could give them a check or buy a certified funds money order and pay them right now. I have been saving up for place like this for years. It hurts to miss out on it because of something so trivial. 

Originally posted by @Jared Skillicorn :

I agree with other comments. We have submitted several offers without a pre approval letter from a bank or showing proof of funds. It s a good idea to just provide one or the other to make sure your offer is strong in the eyes of the seller.

 I agree, but In this case I feel the agent should have allowed me the option to place the offer without proof of funds. Considering the interest she already had from others with this property, and the amount of time it would take me to get the proof of funds. 

This is a cash sale. I'm expecting the house to be under contract by Tuesday. Which isn't enough time for me to get pof.

@Mike Jones Yeah i totally agree with your point of view. Working with a bank as the seller is the worst thing that can happen to a property or to the buyers. I once had a REO property under contract that required $300 worth of fix in order for my bank to approve the loans. The seller's bank would not fix it, and would not even allow my to just pay cash to get it fixed. Eventually the property sat on the market for 4 years before a cash buyer purchased it.

You can get a really good deal with those kind of properties because they make it very hard for a traditional buyer to jump through the hoops. 

Since you are the buyers, i would say find a realtor who have experience dealign with this. It wont cost you anything and it should make it easier for you to have someone else doing the heavy lifting.

Before i was a realtor and only an investor, no one would talk to me directly or give me any info, now, being a realtor, this is no longer the case. For some reason if you don't have a real estate license, the seller's thing you don't know what you are doing and don't want to waste their time, when it fact, many regular buyers actually know way more then the realtor..

If the property is already scheduled for an auctions, they bank might not take any offers anyway and just wait for the auction. Keep in mind the price the property is listed for, might not even reflect the price that the bank would accept. I've seen many properties entered in the MLS for auction for a fraction of the price just to put it there.

So if the property is a good deal, it would be prepared to end up paying more of the market value. And that is probably why the bank just want to do the auction. Plus the person who is handling that account is probably just going by the banks rules.

In my opinion, if the buyer is actually planning to occupy the property, then the bank should prefer them, not an investor. Even if the offer would be lower. (And im an investor but i believe in homeownership and home affordability)

Anyway, good luck to you! Hope it works out for you.

What’s odd to me is what a bank would have to do with anything, if it’s a cash transaction. I’m assuming you explained it was going to be in cash? Obviously, I don’t know your whole situation but I would call her back and make sure she understands exactly what you’re trying to do and that you could have the proof of funds by x date. If you want the property don’t back down. My wife says I’m a little pushy though so take that into consideration. But if you have the funds I would push to prove the funds as quick as possible. Another idea is to offer a larger Ernest money amount to show your serious.

Unless you dont really have the funds, I dont see why you cant show proof.  All that is required for proof is a screen shot of you current bank info with your name on account showing a balance greater then the offer and with account number blocked out.

If you dont want them to know your balance your bank manager can type up a proof of funds letter showing a specific amount in a few minutes Monday morning, but they wont do that if sufficient funds are not in the account

Yes, it will be required on any reo and 90% of other informed sellers.  Why would you take a property off the market for 30-45 days if the buyer had no ability to buy it?

In our area, POF, EMD are required 100% of offers or not even considered. All disclosures are to be signed on each offer. W/O these sellers interpret that buyers are not serious.

Originally posted by @Wayne Brooks :

Yes, it will be required on any reo and 90% of other informed sellers.  Why would you take a property off the market for 30-45 days if the buyer had no ability to buy it?

 I don't want them to sign a contract without proof of funds. 

I want them to tell me whether or not they want to move forward with the offer amount and terms before I disclose my financial information. They will 100% use my balance to make a higher counter offer. It makes no sense for me to provide that information up front in a negotiation.

My bank has no local branch and it's going to take a while to get them to write a letter. I also have to make some deposits. It's going to take up  to a week to get all that done. I'm not denying them Pof. I just need time to get it. By the time I get what the agent considers proof of funds the property will be under contract.

Originally posted by @Scott Rogers :

Unless you dont really have the funds, I dont see why you cant show proof.  All that is required for proof is a screen shot of you current bank info with your name on account showing a balance greater then the offer and with account number blocked out.

If you dont want them to know your balance your bank manager can type up a proof of funds letter showing a specific amount in a few minutes Monday morning, but they wont do that if sufficient funds are not in the account

 That is the point. My bank does not have a local branch in my state. It's not like I can just walk in the bank and get it done.

I could pay for the house today cash or certified funds money order, but that doesn't seem to matter. I would give them 90% earnest money on the property, but I can't get to that point without being allowed to even submit an offer.

This is not about denying them proof of funds, it's about getting my offer in before the property is sold. 

@Mike Jones Seems like you have already got your answer but almost all REOs (bank owned property) will request proof of funds. It is to help weed out offers that are not serious. You should already have a proof of funds or cash on hand to cover the offers you are making unless you are planing on wholesaling. And you don't need to have a letter from a bank, just a screenshot or print out of a recent balance. If you are keeping your money in cash at your house and not in the bank, then they will not accept it. There is way too many legal issues with that. Money laundering and inability to track payments could be a serious thing in real estate transactions. No title company, escrow place, or law office I know of takes actual cash to purchase real estate.

As far as it going to an auction, well a lot of auctions are cash paid immediately. I know at the court house auctions in Texas, they will check your cashier's checks before you start to bid so there is verification of funds. Auction.com makes you submit a proof of funds too. This is an extremely common practice.

@Mike Jones   Having 10 times the amount in cash, and showing it, does not make them raise their counter offer...this is a somewhat common fear...it doesn't matter.  I routinely had buyers showing over $1M when buying $100-200k properties.

The bank Simply wants to know you can actually buy at the contract price, Period.

You're making this harder on yourself than you need to.  They don't deal in verbal inquiries/offers.

@Mike Jones

I recommend all of my clients do not even look at an offer without POF. Banks have policies and procedures and I would pretty much guarantee their policy is "Do not let offers without proof of funds past the gate". I won't show more than one house without a pre-approval letter or POF.

Proof of funds is whatever they consider valid. You can go online and get a preapproval in about 45 seconds from a number of places. Does not mean you need to use that method to purchase the house. As far as the bank coming back and saying "This guy has 2 mil in the bank we can get him to pay $1300 more for the house, it does not happen. Now regular sellers, may think that way. Banks do not. If you can't show them a bank statement showing you have the 15K or a preapproval letter for a personal/convention loan. Then the offer is not going to get an audience with the decision maker. It is going to sit in a file that only moves forward when all boxes are checked. POF is a checkbox.

If you have the cash it takes about 15 minutes to walk into any bank and have an account opened up and them to write up a letter (on their letterhead) stating that you have over X dollars in the account. You can also get a certified check made out to "XYZ Bank OR Mike Jones" and send a copy in with the offer. If they accept send in the check, if they don't cash it yourself.

@Jiri B.

"But either way, the listing agent has to present your offer no matter what the offer is. They cannot "screen" the offers. All offers has to be submit to the seller."

I will disagree with this a bit. When listing I ask a couple questions

1) What is the minimum offer you want to see? If someone comes in at 50% do you want me to even tell you? (Most times the answer is no and I recommend we go with somewhere around 80%)

2) Do you only want to see offers on our standard GRAR contract? If it is on a cocktail napkin or some other form I am going to recommend you have your lawyer read it first. That may be billable time to even look at their offer. (Most require our standard form)

So as long as I have that in writing I can screen offers based on agreed upon criteria. Writing "I will pay $50 for your house on a napkin" does not guarantee an audience with the king. 

Originally posted by @Ryan Blake :

@Mike Jones Seems like you have already got your answer but almost all REOs (bank owned property) will request proof of funds. It is to help weed out offers that are not serious. You should already have a proof of funds or cash on hand to cover the offers you are making unless you are planing on wholesaling. And you don't need to have a letter from a bank, just a screenshot or print out of a recent balance. If you are keeping your money in cash at your house and not in the bank, then they will not accept it. There is way too many legal issues with that. Money laundering and inability to track payments could be a serious thing in real estate transactions. No title company, escrow place, or law office I know of takes actual cash to purchase real estate.

As far as it going to an auction, well a lot of auctions are cash paid immediately. I know at the court house auctions in Texas, they will check your cashier's checks before you start to bid so there is verification of funds. Auction.com makes you submit a proof of funds too. This is an extremely common practice.

 Thanks for the advice.

When i say In cash, I mean that i can withdraw the money in cash today. Or I could use my bank card and buy  a certified funds money order. These are ways to show that I have the funds on hand. Writing a check wouldn't work, because it could theoretically bounce. I didn't mean that I have it in actual cash.

I don't have a problem showing proof of funds. It's just i fear the property will be sold before I get to make an offer. It will only take a few days, but the property has a few offers already per the listing agent. The listing agent says a print of my balance wouldn't work. I need something from the bank. I will call them in the morning and see what can be done.


Thanks for your replies.