Investor · Niagara Falls, NY · Member since 2016 · 12 posts · 4 votes
if i want to lock up a wholesale deal with a seller and we agree on a price am i going to need to provide the seller with some sort of proof of funds even tho i plan on assigning it to an end buyer? im not really clear on how this works any advice would be greatly appreciated
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
I assume you told the seller that you're actually buying it? If they are informed, or have an agent, yes they will require a POF. Either you have the money or you don't....that's what a POF is for. If you don't have the money then you can't show Proof of it. Wholesalers need to find uninformed or desperate sellers.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
I assume you told the seller that you're actually buying it? If they are informed, or have an agent, yes they will require a POF. Either you have the money or you don't....that's what a POF is for. If you don't have the money then you can't show Proof of it. Wholesalers need to find uninformed or desperate sellers.
Proof of funds says you are pre approved for financing or you have cash to purchase the property. With transactional funding a lender provides funds for you to purchase the property with no down payment at the contracted value based on the end buyer qualifying for funding. Some transactional lenders offer financing for the end buyers, especially if the end buyer is a real estate investor.
This is a relatively easy and simple option if you have a buyer that you want to sell the property to. This can be more complicated if you are attempting to market the property once you tie it up.
Lender · Troy, MI · Member since 2019 · 432 posts · 147 votes
5y
@Lucas Duncan As a wholesaler, you might have to show POF to show you have the ability to purchase. Also, it is good to be transparent to the seller that you are going to assign this contract to someone else. Might consider saying, you may not close within 30 days and your contract expires, etc.; so that you are honest in your dealings.
There are folks like us who can do double closing to facility funding as transactional sources.
Realtor · PInellas County Largo, FL · Member since 2016 · 902 posts · 810 votes
5y
You should be able to show the ability to purchase. Unfortunately for them, not every seller will make sure the buyer can -- I've seen it more than once in a FSBO situation and with "wholesale" deals that fall apart.
Unless you informed the seller that you are assigning the contract to another buyer. And in that case, it should be spelled out in the contract
Rental Property Investor · Gwynn Oak, MD · Member since 2015 · 42 posts · 19 votes
5y
@Lucas Duncan Consider learning how to wholesale lease options. And don't pay any attention to realtors and brokers who deride wholesaling and those who falsely claim that wholesaling is unethical. Wholesaling is not unethical but there are unethical wholesalers. Offer 100$ earnest deposit money at least and inform your sellers that you intend to make a profit upfront.
Flipper/Rehabber · Okeechobee, FL · Member since 2020 · 41 posts · 8 votes
5y
@Wayne Brooks - lol all he would need to do is have a HL or PL give him documentation that they will fund him. Really "wholesalers" need desperate or uninformed sellers, sounds like what most investors are looking for.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
@Brian Brown He was asking about a POF, supposedly for a cash deal....as we know, hard money and private lenders provide loans....he'd need to offer as financed.
Rental Property Investor · Gwynn Oak, MD · Member since 2015 · 42 posts · 19 votes
5y
@Wayne Brooks Most and any seller can look on Zillow to ascertain the Zestimate. I have been doing wholesaling for 21 years, and I have never ran into the mythical" uninformed seller" who didn't know about Zillow, Trulia, Redfin etc..
Rental Property Investor · Gwynn Oak, MD · Member since 2015 · 42 posts · 19 votes
5y
@Lucas Duncan You will rarely if ever run into the mythical" uninformed seller" who has been living as a hermit in the Himalayas and found out he has inherited a house and hasn't heard of Zillow. Again, just be forthright and candid with your sellers. Pay no attention to the ethics police. Many realtors and brokers will despise you as they are jealous. The NAS is trying to bring the hammer down on wholesalers by lobbying local and state governments to ban or regulate wholesaling. Therefore, be sure to become knowledgeable about your state and local laws regarding wholesaling. It's a good idea to build a relationship with a good title company and private and hard money lenders.
@Wayne Brooks No, many hard money lenders will give a wholesaler a POF if they ask for one.
Robert,
Yes I know that....but that is showing the HML has the money, which they may loan to the buyer....making it a financed offer, not a “cash” offer. Of course, IF the HML funds the buyer it’s all the same. But the purpose of a POF is to show that buyer making a Cash offer, Already has the funds and isn’t dependent on getting a loan. I know you know this and the “get a POF from your HML” is just a fuzzy way of trying to Pretend a buyer is a Cash buyer.
Investor · Niagara Falls, NY · Member since 2016 · 12 posts · 4 votes
5y
sorry for my delayed reply all of this input from all of you is great and i really appreciate it. basically the most important thing i gathered is to be upfront and transparent with what im trying to do when i find a deal and be honest with the seller because i am not trying to pull one over on the seller or do anything unethical here i just want to be a good wholesaler that can help people and make some money in doing so thanks again
Investor · Boca Raton FL · Member since 2017 · 255 posts · 188 votes
5y
@Lucas Duncan no need to overthink it, 95% of the time the sellers won't ask for a POF, as long as you stick with off-market / direct to sellers kind of deals you'll be fine.
Along the way build some relationship with private money lenders, they're the ones who can fund your deals, help you grow your business and provide the POF when needed.
Also I disagree with what has been said here; you can do a cash offer and still use your PML POF since it's not considered a financing contingency.
Lender · Houston, Tx. · Member since 2023 · 91 posts · 60 votes
2y
1) Your verbiage in your contract clearly states the right to assign your interest in the contract. You can use your state promulgated (advised) contract, or a simple purchase and sale agreement, would than assign it to your end buyer. You do not need transactional funding, but you will need to disclose of the assignment, and both buyer and seller will see the amount that you are making as an assignment fee.
2) You use your state promulgated contract on the A-B & B-C - not having to disclose the assignment, and you use transactional funding to fund the first closing. We do transactional funding nationwide for 1% of the frontside fee (no other processing or hidden fees) and it really just depends on state laws, disclosures and how you are setting up your wholesale deal.
It does not constitute fraud if you have a PAL - But it will state that in order to qualify for the loan, certain criteria will need to be met (credit, appraisal, survey) etc.
We have wholesalers who ONLY double-close (due to local laws or they prefer the benefits) and some who only assign. It really depends on many factors what is the best for your deal & operation.