What to do if a motivated seller asks for proof of funds?
Real Estate Agent · Southampton, NY · Member since 2024 · 82 posts · 24 votes
What to do if a motivated seller asks for proof of funds?
Most Popular Reply
Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesQuote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
That being said, I’m going to provide you with some hard facts; “wholesaling” is NOT anything like what is described in YouTube videos, guru seminars, or lead on to $40k mentorship programs. Rather than go into a long narrative, I’ll just state the facts
1. 99% of all people who try “wholesaling” never make even minimum wage from their efforts
2. “Wholesaling” is under attack in many states and local jurisdictions
3. Wholesaling is NOT investing, it’s a sales job or marketing business
4. Successful wholesale operators spend $10,000 per month and up on marketing /lead generation
5. Most information on line concerning wholesaling is BIASED because the person providing the information is benefiting in some way by the distortion of facts
6. You may need to be a licensed real estate broker/agent to wholesale legally in many jurisdictions
7. Wholesaling will only marginally teach you or provide you with experience useful for real estate investment
8. Tying up a desperate and in arrears homeowner with a purchase contract you can not perform on and in which a sale will happen ONLY if you are successful flipping the property for a higher price can cause extensive damage to the homeowners finances, credit and personal life.
32 Replies
- Real Estate Agent · Southampton, NY · Member since 2024 · 82 posts · 24 votes2yI’m talking from a wholesalers perspective. If I’m the wholesaler, how do I show proof of funds when I’m not the one buying the house, and what do I do when the potential buyer im assigning the contract to wants to go see the house. Thanks!
Quote from @Account Closed:
Quote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
I'm not sure if it's a trick question, but when a seller asks for proof of funds, you provide proof of funds. That is usually confirmation from your banker, your bank account with the account number redacted or a letter from your lender.
Or am I missing something in the question?
- Real Estate Consultant · Panama City, FL · Member since 2019 · 83 posts · 11 votes2y
Send a pof letter
- Member since 2018 · 1k+ posts · 1k+ votes2y
The fact that you are knowingly leaving out the most important fact from your scenario tells me this is a con scenario. Specifically, have you explicitly informed the seller that you are wholesaling?
- Real Estate Agent · Southampton, NY · Member since 2024 · 82 posts · 24 votes2y
Quote from @John Clark:
The fact that you are knowingly leaving out the most important fact from your scenario tells me this is a con scenario. Specifically, have you explicitly informed the seller that you are wholesaling?
Hey John I am just new to wholesaling and I want to start wholesaling but every video I saw or book I read on wholesaling says to not mention to the seller we are wholesalers, but probably is better off for everyone to be honest about what I am trying to do with the property, no matter if I am looking to assign it, do a 1031 exchange, use it as a rental, etc.
- Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes2y
@Agustin Rossi you’d have to make the contract assignable and have seller agree others can enter the home, anyway, so if you don’t have funds to purchase, you’d need to find a lender or private funding that will give you pre-approval, or not many sellers will take you seriously and let you tie up their house. Many states are starting to prohibit wholesaling, so make sure your state isn’t one of those.
- Member since 2018 · 1k+ posts · 1k+ votes2y
Quote from @Agustin Rossi:
Some things in life are simple, and this is one of them: If your business plan depends on dishonesty and concealment, then it is wrong.
- 2yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesI’m sure you’re well intentioned - and want to learn the real estate industry while earning some money.
Quote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
That being said, I’m going to provide you with some hard facts; “wholesaling” is NOT anything like what is described in YouTube videos, guru seminars, or lead on to $40k mentorship programs. Rather than go into a long narrative, I’ll just state the facts
1. 99% of all people who try “wholesaling” never make even minimum wage from their efforts
2. “Wholesaling” is under attack in many states and local jurisdictions
3. Wholesaling is NOT investing, it’s a sales job or marketing business
4. Successful wholesale operators spend $10,000 per month and up on marketing /lead generation
5. Most information on line concerning wholesaling is BIASED because the person providing the information is benefiting in some way by the distortion of facts
6. You may need to be a licensed real estate broker/agent to wholesale legally in many jurisdictions
7. Wholesaling will only marginally teach you or provide you with experience useful for real estate investment
8. Tying up a desperate and in arrears homeowner with a purchase contract you can not perform on and in which a sale will happen ONLY if you are successful flipping the property for a higher price can cause extensive damage to the homeowners finances, credit and personal life. - Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes2y
Hey Agustin, make sure to set expectations right from the beginning. If you don't have the funds to provide proof, get a hard money lender to issue one for the property you are offering. Before getting under contract, set clear expectations with the seller about what the process will look like. We always do a 15-business-day inspection period and advise the seller that we will need access to the property, which usually takes 2 to 3 days to get our financial partners and contractors to the site.
- Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes2yFacts!
Quote from @Don Konipol:
I’m sure you’re well intentioned - and want to learn the real estate industry while earning some money.Quote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
That being said, I’m going to provide you with some hard facts; “wholesaling” is NOT anything like what is described in YouTube videos, guru seminars, or lead on to $40k mentorship programs. Rather than go into a long narrative, I’ll just state the facts
1. 99% of all people who try “wholesaling” never make even minimum wage from their efforts
2. “Wholesaling” is under attack in many states and local jurisdictions
3. Wholesaling is NOT investing, it’s a sales job or marketing business
4. Successful wholesale operators spend $10,000 per month and up on marketing /lead generation
5. Most information on line concerning wholesaling is BIASED because the person providing the information is benefiting in some way by the distortion of facts
6. You may need to be a licensed real estate broker/agent to wholesale legally in many jurisdictions
7. Wholesaling will only marginally teach you or provide you with experience useful for real estate investment
8. Tying up a desperate and in arrears homeowner with a purchase contract you can not perform on and in which a sale will happen ONLY if you are successful flipping the property for a higher price can cause extensive damage to the homeowners finances, credit and personal life.
Yep. Our price per contract is about $4,500 but will change depending on your marketing channel and market. - 2yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Quote from @Account Closed:
Quote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
I'm not sure if it's a trick question, but when a seller asks for proof of funds, you provide proof of funds. That is usually confirmation from your banker, your bank account with the account number redacted or a letter from your lender.
Or am I missing something in the question?
You are missing a poison that is not the fault of the person posting, but rather of high priced educational salespeople in the wholesaling industry.
This industry of wholesaling has an absolutely disgusting practice of encouraging “wholesalers” with no money, no job, and no income, to get a “proof of funds letter”. This is encouraged, in many cases, as part of a high priced program touted by a guru.
This letter is ridiculous. It implies that funds are available to purchase the property. Where the letters aren’t outright fraudulent and lies, they are misleading, with the person selling or giving the proof of funds letter to the unqualified wholesaler doing zero due diligence on the property and at best stating that, technically, funds could exist and or be set aside for the purchase of the property,The practice, when used this way is meant to mislead, and those who ask for, give out, or receive, proof of funds letters in this way are not welcome here on BiggerPockets.
The right answer here is to qualify for a loan on the property personally, and show this to a seller, or to be straightforward with the seller that you are in no position to buy the property personally, but will be wholesaling it for them.
Or... better yet... get a license and represent them as a seller's agent.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
Is this a real question? I swear, BP unfortunately is turning into FB.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Agustin Rossi:
Quote from @John Clark:
The fact that you are knowingly leaving out the most important fact from your scenario tells me this is a con scenario. Specifically, have you explicitly informed the seller that you are wholesaling?
Hey John I am just new to wholesaling and I want to start wholesaling but every video I saw or book I read on wholesaling says to not mention to the seller we are wholesalers, but probably is better off for everyone to be honest about what I am trying to do with the property, no matter if I am looking to assign it, do a 1031 exchange, use it as a rental, etc.
AS I have mentioned 100x, STOP READING BOOKS, and watching videos, a waste of time, its not reality. Sure you may pick up one thing here and there but not enough. Get to your local RE meetup,
If you have a deal show it to someone doing deals. They will pay you a fee, LEARN, save and go on your own
Good luck
Wholesaling in LI HMM, not going to be easy
- 2yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesWhat many who consider wholesaling are trying to do (probably without being cognizant of it) is trying to SHORT CUT the education, experience, and capital necessary for successful real estate investment. Sure, one out of a million may hit a home run first time out. You may also win $200 million at the lottery. Reality is you need to have knowledge of real estate principles, real estate law and real estate finance to be a successful real estate investor.
Quote from @Bob S.:
Quote from @Agustin Rossi:
Quote from @John Clark:
The fact that you are knowingly leaving out the most important fact from your scenario tells me this is a con scenario. Specifically, have you explicitly informed the seller that you are wholesaling?
Hey John I am just new to wholesaling and I want to start wholesaling but every video I saw or book I read on wholesaling says to not mention to the seller we are wholesalers, but probably is better off for everyone to be honest about what I am trying to do with the property, no matter if I am looking to assign it, do a 1031 exchange, use it as a rental, etc.
AS I have mentioned 100x, STOP READING BOOKS, and watching videos, a waste of time, its not reality. Sure you may pick up one thing here and there but not enough. Get to your local RE meetup,
If you have a deal show it to someone doing deals. They will pay you a fee, LEARN, save and go on your own
Good luck
Wholesaling in LI HMM, not going to be easy
- Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes2y
Quote from @Agustin Rossi:
I’m talking from a wholesalers perspective. If I’m the wholesaler, how do I show proof of funds when I’m not the one buying the house, and what do I do when the potential buyer im assigning the contract to wants to go see the house. Thanks!Quote from @Account Closed:
Quote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
I'm not sure if it's a trick question, but when a seller asks for proof of funds, you provide proof of funds. That is usually confirmation from your banker, your bank account with the account number redacted or a letter from your lender.
Or am I missing something in the question?
if the buyer is asking you for your POF then that means he believes you are buying the property. If you are not buying the property, then you probably lied to the owner. Be honest in your business dealings and you wont have this problem. Your only option now is to come up with the money to buy the place or come clean and admit everything to the owner.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Don Konipol:
What many who consider wholesaling are trying to do (probably without being cognizant of it) is trying to SHORT CUT the education, experience, and capital necessary for successful real estate investment. Sure, one out of a million may hit a home run first time out. You may also win $200 million at the lottery. Reality is you need to have knowledge of real estate principles, real estate law and real estate finance to be a successful real estate investor.Quote from @Bob S.:
Quote from @Agustin Rossi:
Quote from @John Clark:
The fact that you are knowingly leaving out the most important fact from your scenario tells me this is a con scenario. Specifically, have you explicitly informed the seller that you are wholesaling?
Hey John I am just new to wholesaling and I want to start wholesaling but every video I saw or book I read on wholesaling says to not mention to the seller we are wholesalers, but probably is better off for everyone to be honest about what I am trying to do with the property, no matter if I am looking to assign it, do a 1031 exchange, use it as a rental, etc.
AS I have mentioned 100x, STOP READING BOOKS, and watching videos, a waste of time, its not reality. Sure you may pick up one thing here and there but not enough. Get to your local RE meetup,
If you have a deal show it to someone doing deals. They will pay you a fee, LEARN, save and go on your own
Good luck
Wholesaling in LI HMM, not going to be easy
this person has zero business speaking with any seller, MUST learn 1st
- Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes2y
Hey @Agustin Rossi I understand you completely. You dont want to lie and say something that is not true. BUT you also want to get the property under contract and make some money.
I hope to put you at ease. I have NEVER, and I mean NEVER had someone who is 8 or 10 months behind on their mortgage or someone who is getting divorced and NEEDS to sell their house ask me for a proof of funds letter. Never, Never, Never, Never.
I have had EVERY realtor ask for one, proof of funds or loan qualification letter, but never a motivated seller.
But I was afraid of the question also when I first started. What I did was talk with the seller so that I would know what the situation was and where they were on price. I would let the seller know that I was going to talk to some people who might be interested in purchasing the property. The way that I would get paid for my time was that I would have to contract the property and then assign the contract to someone else for a little more.
I would bring my potential buyer with me to see the house.
If you have a really motivated seller, they just want to get their little bit out of the house and be done with it. They dont really care what you are going to do with the house, they just want their 5k or 20k or whatever.
- 2yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesScott, I feel like we have to distinguish between the new person who honestly doesn’t know and may be being misled by the guru hype, and the hostile newbie who post after having already paid for a mentorship and either psychologically can’t “handle the truth” or is trying to recover his money already spent on the program by receiving compensation for “recruiting” other “innocents”. This is when the program takes on another aspect of network (multi level) marketing. (The first aspect is the religious zeal that the “mentor” tries to initiate).
Quote from @Scott Trench:
Quote from @Account Closed:
Quote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
I'm not sure if it's a trick question, but when a seller asks for proof of funds, you provide proof of funds. That is usually confirmation from your banker, your bank account with the account number redacted or a letter from your lender.
Or am I missing something in the question?
You are missing a poison that is not the fault of the person posting, but rather of high priced educational salespeople in the wholesaling industry.
This industry of wholesaling has an absolutely disgusting practice of encouraging “wholesalers” with no money, no job, and no income, to get a “proof of funds letter”. This is encouraged, in many cases, as part of a high priced program touted by a guru.
This letter is ridiculous. It implies that funds are available to purchase the property. Where the letters aren’t outright fraudulent and lies, they are misleading, with the person selling or giving the proof of funds letter to the unqualified wholesaler doing zero due diligence on the property and at best stating that, technically, funds could exist and or be set aside for the purchase of the property,The practice, when used this way is meant to mislead, and those who ask for, give out, or receive, proof of funds letters in this way are not welcome here on BiggerPockets.
The right answer here is to qualify for a loan on the property personally, and show this to a seller, or to be straightforward with the seller that you are in no position to buy the property personally, but will be wholesaling it for them.
Or... better yet... get a license and represent them as a seller's agent.
- Investor · Winston-Salem · Member since 2024 · 29 posts · 9 votes2y
I am currently in Astroflipping, which is a wholesaling platform and the website I use is flipfundllc.com, my mentor sends them out through email and it's only about 12 dollars.
- 2yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Faris Wright:
I am currently in Astroflipping, which is a wholesaling platform and the website I use is flipfundllc.com, my mentor sends them out through email and it's only about 12 dollars.
Clearly you did not read this thread. @Scott Trench president of BP could not have been much clearer “The practice, when used this way is meant to mislead, and those who ask for, give out, or receive, proof of funds letters in this way are not welcome here on BiggerPockets.”
more important you are promoting a fraudulent POF that has high chance to adversely affect the seller if the wholesale does not find a buyer. Do you care?
I have done well in RE. People know if I provide something, it is real. If I say I will pat a bird dog for properties I purchase, I do. Reputation has its benefits.
please consider the repercussions of your actions. In some cases the repercussions can be extreme. - Investor · Winston-Salem · Member since 2024 · 29 posts · 9 votes2y
I am totally aware of the repercussions of fraudulent POF. However, my mentor is my hard money lender, he actually has the cash in his bank account. If the deal is a deal, he will fund. My apologies for the miscommunication, the last thing I want is a bad reputation.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Agustin Rossi:
I’m talking from a wholesalers perspective. If I’m the wholesaler, how do I show proof of funds when I’m not the one buying the house, and what do I do when the potential buyer im assigning the contract to wants to go see the house. Thanks!Quote from @Account Closed:
Quote from @Agustin Rossi:
What do I do or say when a potential seller lead ask me for proof of funds to put the house under contract? And then what do I do if a potential buyer wants to go see the house during inspection time, what do I do or what do I tell the seller? Thanks!
I'm not sure if it's a trick question, but when a seller asks for proof of funds, you provide proof of funds. That is usually confirmation from your banker, your bank account with the account number redacted or a letter from your lender.
Or am I missing something in the question?
Oh, so when you've misrepresented self and falsely claimed ability to purchase and seller is looking for proof of those false claims what do you do.......
I suggest checking in on the assorted laws your working to violate, that would be a good starting point.
- 2yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Quote from @Account Closed:
Quote from @Dan H.:
Quote from @Faris Wright:
I am currently in Astroflipping, which is a wholesaling platform and the website I use is flipfundllc.com, my mentor sends them out through email and it's only about 12 dollars.
Clearly you did not read this thread. @Scott Trench president of BP could not have been much clearer “The practice, when used this way is meant to mislead, and those who ask for, give out, or receive, proof of funds letters in this way are not welcome here on BiggerPockets.”
more important you are promoting a fraudulent POF that has high chance to adversely affect the seller if the wholesale does not find a buyer. Do you care?
I have done well in RE. People know if I provide something, it is real. If I say I will pat a bird dog for properties I purchase, I do. Reputation has its benefits.
please consider the repercussions of your actions. In some cases the repercussions can be extreme.@Dan H. was being nice. I have more of a legal background approach. I’m sure you were just being helpful, but you can be sued and investigated. Ask your attorney why.
Fraud and deceptive practices come to mind. Those are the ones you would understand. The other legal complaints are worse and not so obvious.Do the right thing and don't deceive people regarding their most valuable asset. If you don't understand why a fake POF is deception, ask an attorney, not a wholesaler guru.
Incidentally, you don’t have to be successful in the crime to be convicted of the crime. The crime is in the “attempt”.
Bob - get a load of this:
- Mentor charges broke student thousands of dollars to get into wholesaling. Broke student had no money before the course, but now has a $5K - $10K credit card balance now after paying for high priced wholesaling and get rich quick education.
- Obviously, student is not going to be buying a house anytime soon, much less making cash offers. Student would not be happy with mentor to be even broker, and still unable to buy real estate.
- So, mentor, who takes in millions from $5K - $10K coaching program, takes $1-2M and sets it aside in a bank account. They install a virtual assistant, and when broke students call in for POF letters, a virtual assistant signs on mentor's behalf, saying that, technically, funds exist which could be used to buy the property. The POF letter does not say that student had the funds (though it heavily implies it and the student certainly implies this when presenting offers to would be sellers), rather it says that "funds are available to purchase the property."
Mentor’s virtual assistant processes these letters, and the $12 fee is just to cover the costs. The profit center is the coaching program.
- Perhaps, once in a blue moon, with a particularly popular “student” or screaming good deal, the mentor actually uses the funds in the account to purchase a property.
Do have outright Fraud? I guess technically not.
Letters being used to trick desperate old people? Probably.
And what? We are going to rip on the 20-something broke kid who was probably recruited into the program by someone they trusted with an MLM type vibe? Maybe someone who thinks they are legitimately trying to make something of themselves, not knowing that most of the industry thinks the practice is unethical?
Maybe the “student” deserves some blame, but the punishment, in my view is more than served by the huge failure rate in the wholesaling industry, coupled with the near total loss on the educational investment.
All illustrative, of course. But, this is the kind of “real estate investing” that people can go learn about somewhere other than BiggerPockets.
- 2yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Treat homeowners who need to sell because they are in financial trouble like you would like someone to treat your parents.
Unless you hate your parents, this will always guide you down the morally correct path.
- 2yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Treat homeowners who need to sell because they are in financial trouble like you would like someone to treat your parents.
Unless you hate your parents, this will always guide you down the morally correct path.
- Real Estate Agent · Southampton, NY · Member since 2024 · 82 posts · 24 votes2y
Thank you everyone for your feedback and I am sorry if I offended you. I was asking as a beginner and from an innocent point of view. You are right and I should have thought about it more thorough. This is why I asked in BP before doing anything ilegal or even worse, something that would put the seller in a bad spot. Sorry again.
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