I am negotiating my first deal (fix and flip) and need Proof of Funds. Here is some background...
I've been going back and forth with a seller working through propoffer.com. The original list price was just over $100,000. All my offers have been conventional financing and the last counter offer we received from the seller was the same as the previous counter offer, so I think we hit their bottom line? But I told my agent we were willing to offer our best and final offer as an all cash offer $14,000 below the most recent counter offer. That is our upper limit; we will walk away if we can't get it for that price. We will most likely NOT get it, but plan to try again in 3 or 4 weeks. (It's been on the market for over 150 day with very little traffic). Anyway.... My agent said we would need to provide POF, and here is where things get tricky...
I am getting a personal loan from my mom for the purchase price and rehab cost, less 20% of my own money. I will pay my mom a flat 3% for the loan once I sell the flip. She can easily pay me the money in one lump some. The 20% of my own money will come out of a loan against my 401(k). Oh, and for some reason, my mom does not want her name involved in any part of a real estate transaction. So here are some questions:
1) Who actually looks at the POF? Is it agents only? Will the seller see it?
2) Can I simply provide a printout of my mom's bank account as POF? Or does it need to be a letter from her financial institution?
3) My mom has enough to cover the full amount, so should I even bother providing my 401(k) statement and documentation showing how much I can withdraw for a loan? Or would it be better to show my "skin in the game?"
4)Last, my mom has more money in her bank account than the original list price. Would it be a bad idea to show POF substantially higher than the list price of the property we are lowballing? Could the financial institution write a letter stating that there is $XX,XXX in the account, and have that exactly match the offer amount, or state she has "at least" $XX,XXX in the account?
I may be overthinking this, but any advice would be much appreciated!
Your escrow company should be able to provide the seller with the information they need using your mother's bank statements.