Investor · Tucson, AZ · Member since 2015 · 64 posts · 3 votes
Hi everyone, quick question, I'm putting an offer in on a REO property today and bank is requiring a proof of funds letter. I've provided one to other banks before for other purchases but is it a good idea to only get the proof of funds for my initial offer amount which is $78,000? I might go a little higher if they counter but I'm thinking it's not a good idea to show them how much I have so they might try and raise their asking price for me. On the other hand I don't want to be going into the bank every day for a proof of funds letter for different amounts for different houses I'm bidding on. Any advice would be great! Thanks, Jeffrey Hayes
It's an irrelevant concern. I'm sure they just roll their eyes when they see a POF for the exact amount of the offer....if anything, it probably makes them more suspicious. Clients often show hundreds of thousands of dollars when buying $80k properties......it doesn't mean they're willing to pay more, just because they have more.
The seller will not be thinking the amount shown in your PoF letter is all the funds you have available. It is a well known tactic to not show all your funds. I don't know that you gain any advantage in doing that, but it might not hurt either.
It's an irrelevant concern. I'm sure they just roll their eyes when they see a POF for the exact amount of the offer....if anything, it probably makes them more suspicious. Clients often show hundreds of thousands of dollars when buying $80k properties......it doesn't mean they're willing to pay more, just because they have more.
For Owner Occupy selling to Owner Occupy standard retail sale. I recommend they get the exact amount. It keeps a relationship with the mortgage bankers and for buyers that buy one house every 15 years it makes sense to me. The seller who sells one every 15 years likes to get caught in the deal instead of the actual property.
If you are buying from Investors to investors or a bank, the govt then just showing you can close is fine.
@Jeffrey Hayes While a POF for more than the purchase price could churn the emotions of an individual seller and entice them to try to squeeze a bit more out of you, I doubt it'll have much of an effect on an institutional seller, since their sale is based on a process and data.
Additionally, if they see you have more than your offered price, it goes to show you are a stronger buyer and that you won't be broke and walk when $2k in closing costs pop up. Stand your ground on your offer and your top amount - they won't let you walk just because you have more money and they think you should spend it. The banks have their data as to where they need the price to be, you have your data as to where you need the price to be, and if the final price is within each of those parameters, you'll have a deal.
I just did a P of F for a house purchase. My bank manager was having a hard time understanding I wanted a letter for a certain amount of money, and simply gave me a signed bank statement, which had more than double the house offer. I didn't care what the seller saw I had, my offer was my best and final, no matter if I had $2 more than I offered or $200,000 more.
i've always done the exact amount on the POF letter. esp if you're trying to get a lower price, not the asking price. it's like offering someone $2 for something at a yard sale and then asking for change for a $20. just bad bargaining etiquette in my opinion.
It's an irrelevant concern. I'm sure they just roll their eyes when they see a POF for the exact amount of the offer....if anything, it probably makes them more suspicious. Clients often show hundreds of thousands of dollars when buying $80k properties......it doesn't mean they're willing to pay more, just because they have more.
i've always done the exact amount on the POF letter. esp if you're trying to get a lower price, not the asking price. it's like offering someone $2 for something at a yard sale and then asking for change for a $20. just bad bargaining etiquette in my opinion.
A problem I have with this bargaining 'strategy' is that it amounts to begging the other party to sorrow you. "Please, feel bad and sell this to me, I don't have a penny more" vs. "I'll offer you this amount which is supported by t,u,v,w,x,y,z data. You won't get a penny more because the market doesn't support it."
i guess it just depends on the market you're working in. i'm in a very rural, distressed market, so showing you have 100,000 when you're offering 60,000 (or less) and way below asking price is not good for buyers here. but other markets this might not be the case. i've never purchased a house outside our area.
I think markets are different and should be taken into account if your buying from individuals but when working with a bank or another investor you shouldn't concern yourself with a higher approval amount than your willing to pay. Best of luck with this deal Jeffrey.