Requiring buyers to provide Proof of Funds

Wholesaling
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Requiring buyers to provide Proof of Funds

Jose Guevarra
Real Estate Agent · Mira Mesa, CA · Member since 2014 · 218 posts · 49 votes

Hi, 

During wholesale deals we don't provide much more information outside what is posted on an ad before we see a POF from a buyer. Of course, this detours the window-shopper buyers but, I came across a "reputable" buyer who seemed annoyed that they should have to provide POF before inspecting the property. His words,

"We are the largest cash buyer in XXX! I look at 20 deals a day from wholesalers. I don't have time round up a POF letter for everyone.

Let me know if you can show me the house or not!!!". 

I promise our sellers that we only bring in serious/verified buyers.  Should someone's "reputation" be good enough that they are serious buyers?  What do you guys think?

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Alexander FelicePro Member
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
10y

I sometimes just screenshot my account balance and text it to the agent. Most find this more than satisfactory.

Point is, it's more work to argue over producing a POF than to produce one....UNLESS YOU CAN'T PRODUCE ONE.......

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y

    You should easily be able to verify if they buy a lot, on your own.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jose Guevarra  big buyer would have their bank on speed dial and get letter in 15 minutes.. just check public records and see if their company owns multiple properties or none.. that will give you your answer

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  • Patrick L.
    Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
    10y

    If I'm dealing with an individual I'll just send them a link to the search results for my business name showing the 50+ properties I own. If I'm dealing with a REO property then I'll give them a bank statement.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jose Guevarra  also 20 deals a day I would think is puffing in Santa Barbara county..

    if it was Wayne county MI... or other rust belt cities with hundreds if not thousands of derelict homes I could see that.

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  • Jose Guevarra
    OP
    Real Estate Agent · Mira Mesa, CA · Member since 2014 · 218 posts · 49 votes
    10y

    @Jay Hinrichs I should have mentioned that the property and buyer I'm trying to wholesale is in an eastern state. Not Santa Barbara.  Thanks!

    0Reply
  • CK Hwang
    Capistrano Beach, CA · Member since 2013 · 283 posts · 169 votes
    10y

    Hey Jose, personally as a buyer, I would have no problem downloading a proof of funds and emailing the PDF to you. That is a pretty routine procedure for just about everyone I deal with from wholesalers to realtors to homeowners. And if for some reason I couldn't, I would tell you honestly so that you can decided if you want to deal with me or not. So no, I don't think you are asking too much even if the person is "reputable."

    Now, that being said, as a buyer, if i have never worked with you before or spoken to you or gotten to know you in some way, I would be very nervous about sending you a proof of funds. I have had some shady dealings in the past where a wholesaler used my proof of funds to lock up a property, even though he had told me they had the property locked up but actually they didn't (long complicated story). And that is why nowadays I am super wary of working with wholesalers. I know there are good and honest ones out there, but dang they are hard to find.   

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  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    10y

    I sometimes just screenshot my account balance and text it to the agent. Most find this more than satisfactory.

    Point is, it's more work to argue over producing a POF than to produce one....UNLESS YOU CAN'T PRODUCE ONE.......

    [email protected]Podcast Guest on Show #301
    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jose Guevarra  OK makes a big difference ... in those areas homes are dime a dozen in the major D and C class areas.. and they are the price of a great bottle of wine in many cases... so I can see the guys point....

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    10y

    I agree to provide a letter within 3 days on a signed contract. Until we have a signed deal, they have my word, just like I have their word that it's a good house until I have it inspected. I don't provide anything on speculation. I don't do 20 deals a day - hell, I don't do 20 deals a year - but I'm not giving anyone any of my information until they have a bona fide reason to have it, and "discussing" a property is not a reason. I have never had anyone refuse to show me a house because I didn't provide proof of funds on the front end. 

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  • Roland Paicely
    Raleigh, NC · Member since 2011 · 721 posts · 343 votes
    10y

    Wait, you all are correct!  It sounds like there is no hard and fast answer.  If you have a good deal there will be other buyers.  At the same time, perhaps that's just this guys way of doing business.  Maybe show him the property and at the same time showing it to others.  If you have to explain to the seller why he didn't buy just say that buyer wasn't interested after viewing.  It could be stretching the truth.  But maybe not.  Either way I think it solves your problem.

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  • Adrien C.
    Property Manager · Griffith, IN · Member since 2015 · 1k+ posts · 913 votes
    10y

    I ask for POF for someone to put in an offer if I don't know them or they weren't recommend from another buyer. I've never had an objection at that point. I'll show without POF because I get to meet them and learn more about them- i.e. build a relationship.

    0Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    I require a letter of Loan Pre-Approvial letter AND a POF to consider an offer. Why get into an escrow when the Buyer can not perform ??? That's a zero loss if the buyer balks.

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  • James Holland
    Investor/Consultant · Sacramento, CA · Member since 2011 · 175 posts · 41 votes
    10y

    yeah I also agree with what most are saying. If they are doing deals they have proof of funds letters on command as you will NOT have been the first person to ask for it. It is almost expected as a given. This is business. Not personal. Anyone who makes a fuss and responded to me like that would immediately be off my list. I hate working with cocky "don't you know who I am" type investors. And sadly there are quite a few. Bottom line is they need you more than you need them. If it is a good deal, buyers are everywhere. Everyone is fighting for those killer deals that you hold. Remember that. YOU are in the position of authority. If he doesn't want to play and just wants to beat his chest... move on. Not the type of person you want to be working with long term anyway. Just my opinion anyway.

    1Reply
  • John Rogers
    Real Estate Investor · Davenport, FL · Member since 2015 · 516 posts · 152 votes
    10y
    Originally posted by @Patrick L.:

    If I'm dealing with an individual I'll just send them a link to the search results for my business name showing the 50+ properties I own. If I'm dealing with a REO property then I'll give them a bank statement.

    Several of the investors we work with don't use a "POF template" letter from one of the services that offer that as a product. Instead, they do exactly what is described here... If you are reputable, you have access to your bank statement electronically... it is no big deal to export or "print & scan" a statement that fulfills the requirement.

    0Reply
  • John Santero
    Investor · Chattanooga, TN · Member since 2012 · 227 posts · 114 votes
    10y

    People are people. It might make sense and it might be easy to produce a POF letter but hey- if this guy is a player and is just kicking the tires and looking - and you can verify that he is a player- ask for your POF when he makes the offer and dont piss him off! This may just be his quirk and you may loose a good buyer.

    0Reply
  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    10y
    Originally posted by @Jose Guevarra:

    Hi, 

    During wholesale deals we don't provide much more information outside what is posted on an ad before we see a POF from a buyer. Of course, this detours the window-shopper buyers but, I came across a "reputable" buyer who seemed annoyed that they should have to provide POF before inspecting the property. His words,

    "We are the largest cash buyer in XXX! I look at 20 deals a day from wholesalers. I don't have time round up a POF letter for everyone.

    Let me know if you can show me the house or not!!!". 

    I promise our sellers that we only bring in serious/verified buyers.  Should someone's "reputation" be good enough that they are serious buyers?  What do you guys think?

    Yes and no  in the last 16 years I can say I closed over 700 doors or units.  Even today when I look at talking to potential buyers or sellers. I want to see bank funds so we don't waste each others time. If he closed that many. Let him know your are impressed and can he send you three of his recent deals. So you can view them.

    Alex

    0Reply
  • Robert Andrade
    Construction Trucking Owner / Operator · New Bedford, MA · Member since 2015 · 133 posts · 37 votes
    10y
    Got feeling is that if he were really the hotshot he claims to be he would have developed some better people skills. Personally the attitude alone would have been enough to rub me the wrong way and I would have stood my ground. "Its not a matter of whether I want to show you the property or not. The question is, do you want to see it." "You do? OK. Proof of funds please."
    0Reply
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