Proof of funds required?

Question

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. :(

Wayne Brooks · Answer

@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.

Wayne Brooks · Answer

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?

Scott Rogers · Answer

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

Eric Adobo · Answer

if they want 💰 proof show them the 🎫 S.

Robert Ombres · Answer

Some don't require it. I advise my seller clients to refuse any offers that aren't accompanied with a pre-approval letter or proof of funds.

Mike Jones · Answer

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.

Mike Cumbie · Answer

@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.

Mike Cumbie · Answer

@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.

Ryan Blake · Answer

@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 · Answer

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.

Proof of funds required?

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