Proof of Funds? Which one are you using?

Question

What proof of funds is working best now?  We wholesale in Southern California and have't quite reached the amount to show in a proof of funds letter, thx.

Matt Devincenzo · Answer

Tony there is no such thing as a POF company...it's a load of horse hockey...POF means cash in the bank that is it. Everything else is a pre-qual, pre-approval or letter of credit none are POF.

Tommy Adeoye · Answer

@Tony Escobedo . If you have been wholesaling for a while you may want to talk to a hard money or private money lender.

It can be a pain acquiring a hard proof of funds i.e Bank statement, HELOC etc.

However, what you will receive from a HML or PML is a soft proof of funds i.e a letter stating they will be financing your deal, even so the letter usually holds some kind of caveat/contingency.

In its entirety , proof of funds just shows some of kind of credibility. Usually when I offer a high earnest money- if the deal has some meat in the bone, and build some kind of rapport with the agent/seller, they would go work with the soft POF.

Joe Splitrock · Answer

@Tony Escobedo telling someone you have cash or writing a cash offer, when you don't have the cash is fraud. If you have the cash, then show your bank statement. If you have a bank line of credit, the bank will write a proof of funds letter. If you are relying on an investor, then you don't have funds. An investor you work with has funds, so be careful to clarify that you are assigning the contract, not closing the deal with your own money.

The important thing is being transparent. The way people get in legal trouble is making false claims or false promises. If you lose a deal by being honest, it is better than loosing a deal over accusations of fraud.

Caroline Gerardo · Answer

@Matt Devincenzo is correct there is no legitimate company that will write you a proof of funds letter. When you make an all cash offer you need your bank statement with the offer to show you have the money. If you have a line of credit you may need to pull the money out and put it in your checking account. IF you don't have the money write to offer as with a hard money loan and provide their approval letter.

Nick C. · Answer

Yeah you’re going to have to get a hard money lender pre approval. I’m sure there’s some sketchy POF companies out there that will print something that looks official, but that’s fraud. Usually not the way to go.

Eric James · Answer

It doesn't sound good, but if you don't actually have access to sufficient funds then you need to focus on finding sellers who are too dumb to ask for PoF.

Bill B. · Answer

Just think. If it was a real “this is my money, they can’t get out of it letter…” you could just ask the company for the money. There’s nothing wrong with making a non-all cash offer, 95% of buyers do that and they get deals.

Simply remove the financing contingency, make the earnest money non-refundable and be willing to eat that cost if you fail to perform. Most buyers would accept that.

You’re paying the price for the 95% of “wholesalers” that lied for the last 10 years when they said 1) they were the buyers 2) they had cash.

Tony Escobedo · Answer

Yes I know Peter, just asking what investors/wholesalers use for POF, obviously if you dont have 1mil in the bank and you are buying props in SoCal a bank statement wont work, but of course you can partner w/someone else w/has one, NOT asking about that, I am asking about POF companies, thanks.

Peter Mckernan · Answer

@Tony Escobedo cash in the bank and maybe even getting a partner can help you get over that cash amount you are looking to buy at that price. The cash in the wholesaling game is key for sure!

Caroline Gerardo · Answer

Making a cash offer without the bank statement is not going to get you in contract. Sellers know how competitive the market is.

Proof of Funds? Which one are you using?

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