Wholesale Proof of Funds

[Francisco Garcia]

Hey everyone. I'm a beginner wholesaler and I have a question regarding proof of funds. If I want to get a on market property under contract and work with a realtor, will they need proof of funds? If so, where does that come from? Do I ask my cash buyer for this ? 

[Don Konipol]

Quote from @Francisco Garcia:

Hey everyone. I'm a beginner wholesaler and I have a question regarding proof of funds. If I want to get a on market property under contract and work with a realtor, will they need proof of funds? If so, where does that come from? Do I ask my cash buyer for this ? 

Sellers, and their real estate agents, make every attempt to filter out “buyers” who can’t or won’t close on a property unless they in turn find an end buyer to pay a higher price.  The sellers and agents realize that having a property marketed on multiple listing service put the offering nationwide, through Zillow, Realtor.com, etc.  Chances are every investor interested saw it at the list price - the chances of a “wholesaler” finding an investor to pay OVER the list price is pretty remote.  

So, even a marginally tuned seller/agent will put out some requirements to (hopefully) eliminate the people who want to “tie up” a property but will only close if they can “flip” the purchase contract.  Proof of funds, bank statements, proof of qualifying, pre approval for a mortgage, etc. are all methods of filtering out wholesalers and flippers, as well as “unqualified” buyers.  Additionally, most semi cognizant sellers won’t allow the assignment of the contract, which play havoc with a wholesalers intent to extract a profit “in the middle”. 

About 15 years ago, for a short period of time, hard money lenders would issue these “mortgage approval” letters to anyone and everyone.  One lender even posted the template on their website - the investor just filled in the blanks and printed it off - the lender had pre signed the “document”.  Within a relatively short period of time sellers recognized that these were worthless, and adjusted their criteria accordingly. 

Most wholesalers don’t bother with listed properties, they only deal directly with sellers.