Proof of funds letter
HELLO GUYS I'M NEW TO THE BP COMMUNITY AND I HAVE A QUESTION. I HAVE FLIPPED A LOT OF HOMES BEFORE THE MARKET CRASHED AND DURING THAT TIME I HAD IN PLACE A LINE OF CREDIT AND A PRIVATE MONEY LENDER TO HANDLE ALL OF MY FUNDING NEEDS. FAST FORWARD THE TIMELINE TO TODAY. I'M INTERESTED IN WHOLESALES AND FLIPPING PROPERTIES. HERE'S IS MY ROADBLOCK AND QUESTION. I AM FINDING GREAT DEALS BUT HOW DO I PLACE THESE DEALS UNDER CONTRACT WITHOUT A PROOF OF FUNDS LETTER? I UNDERSTAND THE WHOLESALING PROCESS OR ASSIGNMENT PROCESS. BUT DOES ANYONE KNOW HOW TO PLACE A PROPERTY UNDER CONTRACT WITHOUT A PROOF OF FUNDS LETTER OR HOW DO I GET ONE?
Proof of funds is a general term...not an official document. And there is no relevance for PoF for what you are doing...why would you need PoF if you are not taking title to the property?...I have never heard of a buyer requesting one in a wholesale transaction...I would reach out to a local investor friendly RE agent and ask for a board approved contract for starts...or maybe even some of the clauses that may pertain to a deal you want to lock up. Aside from that, my advice is to use a RE attorney to draft a purchase agreement...well worth the cost.
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@Brandon Sturgill THANKS FOR THE FEED BACK BRANDON. I WAS UNDER THE IMPRESSION THAT WHEN LOCKING UP A PROPERTY THE SELLERS AGENT REQUEST A POF LETTER.
@Shawn Hurley, I would absolutely request a pre-approval or proof of funds from anyone representing themselves as a buyer.
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#1 Foreclosures Contributor
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First, stop with the all caps, it's annoying.
Second, a POF is for a Cash purchase to show You have the cash, sitting in a bank, in Your name. Anything else would be a Preapproval for a Financed offer.
@Aaron Lovett thanks for the reply. @wayne brooks is this better? thank you for your comment.
If you're funding the purchase with cash, then a proof of funds is something I'd require.
I'd also contact the funding source to be sure you're a strong enough borrower to justify taking my client's property off the market.
The thing I want to avoid is having a weak borrower / bogus PoF make me have to put my client's property back on the market after a failed offer, which stigmatizes it.
@Charlie MacPherson thank you for your reply. I wouldn't put a property under contract unless I was going to flip it myself or had a buyer in mind. Wholesaling is new to me not how things normally go in the buy and sell business.
I don't do residential but if I did that wholesaler would be putting up massive non-refundable earnest money maybe 10k or more they lose if they do not perform. If wholesaler balked at that then a give the wholesaler an option to purchase but still have a right to continued marketing clause where you kick them out if a better deal comes along.
Letting a wholesaler lock up a property with little or no intention of closing on anything ifs things go south can damage a seller trying to sell the property.
Money in the bank account talks and BS walks. I find some wholesalers say they have money but then the proof of funds is nothing more than money from someone else who has a bunch of conditions to getting the money. So it is still a loan extending money to the wholesaler with terms.
@joel ownes thank you for your reply.
Call your local HML. They should have what you need.
@Shawn Hurley I'd love to assist and answer questions. Thanks!
@andrew chentow thanks Andrew I will be in touch.
Thanks Ian.
Hi Everyone,
Im new to all of this.. how do I get a proof of funds letter?
@Lori Ambler I have gone to my bank and received them, and also shown my account with my name on it and how much money is in it. Both have worked. If you don't have the funds in the bank, then I am not sure how you would get one...
Thanks, I'll figure it out! :)
I agree that the term "POF letter" is a term used generically, but it's meaning depends on what your needs are.
I know of both "POF" used to mean preparation of a letter prepared by my bank to show that I have proper funds in the bank to cover a CASH purchase or an agreed deposit amount (which accompanied my RE offer) and "POF" used to define a letter generated from the lender (mortgage provider) verifying my pre-approval for financing needed to close the deal.
At my bank (Wells Fargo), I went to the New Accounts Representative in my local branch and they helped with the POF letter for the cash offer. The lender who approves your financing (mortgage) can provide the "POF" letter needed to accompany offers for real estate that include financing.