Why Real estate Sellers Demand Proof of Funds From a Buyer

Real estate sellers often require proof of funds from a home buyer when that buyer is obtaining a mortgage. Most sellers typically want to see evidence that the buyer actually has a down-payment and/or closing costs before agreeing to sell to that buyer. A pre-approval letter isn't always enough. A buyer's word is not enough. Sellers also typically always demand proof of funds from a cash buyer. That's because a listing agent has most likely advised the seller to keep the home on the market until the agent receives proof of funds from the buyer.You might ask why, don't they trust the buyer? And the answer is no, they don't. We live in a digital society that says show me the money.

What is a Proof of Funds Letter and how to get it.

A proof of funds letter is a document that is given to an investor from a third-party company that verifies and provides proof to a seller of a property that the funds to purchase their property are available and ready to be used toward the purchase. In other words, a proof of funds letter is proof to a seller that you have the funds to purchase their property. It ensures the seller that you are not wasting their time because the seller wants to know that if you are interested in purchasing the property,  you have the money to back up your offer.

Even if you are purchasing a property directly from a homeowner who is not being represented by a real estate agent, you will need to provide Proof of Funds. A proof of funds letter can be obtain from your bank branch manager, or a bank statement showing sufficient funds available. When purchasing a property from the MLS, auction, or purchasing any property that is listed by a real estate agent regardless if it is an REO,  short sale, HUD, or a regular homeowner using an agent to sell their property, you will always need to provide a proof of funds letter along with your submitted offer. Agents will not accept your offer or even take you seriously without one.


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