Proof Of Funds-HELP!

63 Replies

I am working with a realtor who has sent me a list of properties on the MLS. I have done a walk through on several of the properties, sent her my offers, and before she writes up the contracts her broker is asking for proof of income. I am not the end buyer, and as a new investor I don't have those kinds of funds laying around in my bank account right now. Also, it doesn't sound right asking the end buyer for money right now before we go to a title company and close on a deal. To my knowledge I thought the money would be held in escrow and the seller gets the money/proof they need then. I don't know what to do and I need help fast!

Thanks,

Barbara Gardner

I believe it is standard practice for the realtor to request proof funds when submitting your offer. I’ve purchased 1 cash property & I had to show proof of funds to my realtor before he submitted my offer.

@Barbara Gardner I think this is part of the reason why most wholesalers don't go through the MLS. There are requirements that you may not be able to meet. The agents/brokers are going to want this for cash offers to substantiate what they are sending to the listing agent/broker and to make sure they aren't wasting their time submitting all these offers without serious end buyers.

Are you working with a brokerage firm that handles real estate investors on a regular basis? Do they know that you are a wholesaler and that you will be double closing or assigning the contract for a fee?

@Ryan Blake Its great to get that information. I don't have a mentor so now I see going along with things there is a lot to learn even after you think you've properly educated yourself. Its understandable that the agents/brokers want to make sure this is a legit deal and I am not throwing numbers at the homeowners they're working with. I am currently not working with a brokerage firm this would be my first deal, If I was to miraculously figure out how to work this. They do know that I am a wholesaler and I explained that I am not the end buyer but I may not have been clear about the fact that I am trying to do a double closing or assigning the contract for a fee. To my knowledge, I didn't think we could assign the realtors contracts, only our own contracts.

@Barbara Gardner The only way to assign a contract (as far as I know) is to have the contract made with this designation in it like "Barbara Gardner and/or Assign" or to have an addendum to the contract (a separate piece to the contract) that specifically states you are able to assign it to another end buyer.

So the broker requesting the proof of funds is the listing broker? It makes a little more sense that they want to see the cash funds in advance.

Be careful to make sure that the contract has plenty of "outs" for you in case you are not able to find someone who will buy it.

In the Texas contract, they have an option period where you can change the purchase price based on pretty much anything but the idea is that you change it after a professional has inspected the property. If you can't come to an agreement then the contract is dissolved. Another out is the contract can be subject to the buyer acquiring financing at certain rates. And finally, the obvious one is that the seller has clean and clear title to the property.

When going off of the MLS you will want to have as long as an option period as possible as this is the easiest way to get out. Options can be any length but typical times in Texas are 5,7,10, or 14 days. The longer the better for you.

Good luck with the deal!

@John Thedford  

After making this post and getting advice from others in the forum I did go back to clarify that I am not actually the end buyer and that I am wholesaling/Assigning the contract. She sounded like she understood a lot more and said after talking it over with her broker she would see how they can adjust some things and where we could go with the information  I clarified for her. 

Any decent agent, listing agent or buyer agent, going to require a POF when submitting an offer. An experienced buyer agent will require it before Showing properties.

Originally posted by @Barbara Gardner :

@John Thedford  

After making this post and getting advice from others in the forum I did go back to clarify that I am not actually the end buyer and that I am wholesaling/Assigning the contract. She sounded like she understood a lot more and said after talking it over with her broker she would see how they can adjust some things and where we could go with the information  I clarified for her. 

 Listen to whatever this man has to say, all I’ll add is market like your life depends on it because dealflow is the lifeblood and you are the heart

if you are not a real buyer and cannot close frankly the question is why would an agent bother to work with you? Do you intend to offer list price or well below list price? I think you should reconsider your strategy?

Why are you trying to wholesale properties off the MLS? That seems like it would be a waste of time

No POF and the deal is DOA

If the realtor doesn't stop the deal the title company/lawyer will

Not many MLS listings that have enough "meat" on them to be even slightly profitable

@John Thedford I understand them not wanting to waste their time and wanting to work with serious buyers. However, if you read the post thoroughly you would have read that it says I’m a “new investor” and there are clearly things that I am still learning. The point of the post was to get input from those who have experienced this or knows someone who has. I think it’s been established by now why they want proof of funds.

@John Thedford When reading this post did I mention that I was a "real" buyer? NO. I mentioned in the original post that I didn't know what to do which is why I asked for advice. Did you read in the post where I came back to explain that I clarified with the realtor that I am wholesaling and there is an actual "END BUYER"? it doesn't sound like it. Obviously she chose to work with me because she thought that I was the end buyer and one could say it was probably safe for her to assume that I knew how this processed works, which I will admit at any time that I don't know how everything works and I am still learning. As far as what I intended on offering, I made my offer and it was below list price. And yes, I am going to reconsider my strategy. Thanks.

@Caleb Heimsoth Well to answer your question I didn't realize that wholesaling off the MLS was a "waste of time" or a bad approach to get a wholesale deal. I don't think you should comment under someones forum, who CLEARLY states that they are new at this and asking for advice, that something is a waste of time. State HELPFUL advice, or don't comment.\\

@Barbara Gardner I’m just stating that to save you some time.  Being new is fine nothing wrong wkth tbat.  

Wish you luck! Wholesaling is typically extremely difficult. 

Don't be discouraged even though the learning curve may now appear as to be a learning cliffffffffff

Lots of help here on BP plus the means of having POF and solutions to many other trip points are readily researchable on this site

Have fun & enjoy the journey