Dumb question: My Realtor wants proof of funds why?

Question

I ask my realtor to put me on a list of houses that need repairing. He says, "sure, give me a POF".

Stupid question: why?

I've asked several realtors to put me on lists for various things. None of them have asked me for a POF letter.

Mind you, I'm sending it, but I'm just curious.

p.s.

he also says things, that I know are wrong about investing to my roommate... who tells me everything he says. Not that I care, as long as I find a deal. Right?

Joel Owens · Answer

Hi Kevin,

I work on the commercial side only but I do similar things with my buyer clients.

I e-mail them, talk to them on the phone, and ask to see proof of funds and PFS statements showing liquidity and net worth.

When I bring an interested party in commercial to the listing broker or an off market seller your credibility is everything. What is more powerful?? A list of 500 people you know nothing about OR Telling the seller or listing broker you have 100 pre-screened and qualified clients that have the ability to purchase that deal size.

The latter of course.

I make a distinction on here between wholesalers and assignors and actual purchasers who are going to buy and hold a property. The wholesalers are a go between to collect a fee and not really a buyer in my eyes. Now if they want to close WITH THEIR OWN MONEY not predicated on another close to the end buyer and then resell later then more power to them.

When I did small apartment buildings I would get these so called buyers. I would tell them if you have funds and close then you can decide to do whatever you want after you own the property. How you get rid of ones playing games saying they will close is to make them put up thousands and thousands of non-refundable EM. Not trying to say anything bad about wholesalers just saying that many are playing games and wasting time. Too many serious and capable buyers out there to waste time on dreamers or non-conformers.

Matt Devincenzo · Answer

He is trying to qualify you as a buyer. A lot of wannabe wholesalers run around and tie up property that they have no ability to get closed, especially on the MLS. This agent is (likely) making sure you have enough cash to either fund the down payment on a property, or make a cash purchase for the amount you're telling him you are looking at. He doesn't want to waste his time sending you properties and maybe running comps if you don't have the ability to see the property through to closing.

As an aside a POF is money in your bank account,not a pre-approval letter from a lender (conventional, private or HM). He might accept that but just be clear about what you're providing him since it does make a difference in what type of offers you're actually submitting.

Darren Sager · Answer

@Kevin Cardinale As a realtor we have to make sure that a person who we take out can actually execute a deal in the price range they're asking us to look at.  We're not supposed to be bringing just anyone into anybody's home just to give them the chance to look around.    I agree with @Matt Devincenzo  that he's in business and time is money.   If you can't execute on a deal why would he or should he put you on any lists.  Before we take out any client we make sure they have either cash or financing.   This realtor sounds like he's asking the right qualifying questions however once you prove yourself to them they should keep their opinion out of it when it comes to your decision about what's a good investment and what's not.  It's your money on the line not theirs.

Patrick Parry · Answer

I am not sure how well you know him, but he is probably asking so he is not wasting his time and basically prescreening.   For the most part fixer deals will require cash or hard money and both cases will require a good amount of cash.

Setting up an auto search is simple and takes 5 minutes so I am sure many Realtors would be willing to do it if he is not.

Nobody likes wasting their time, but it sounds like he may be wasting yours because he does not seem to have the knowledge you are either seeking or expecting from a Realtor.  Us Realtors are a dime a dozen, but the ones who actually work will do their share of work for you.

James Wise · Answer

I'll put someone on an auto MLS list without POF. But am not going to go any further then that until I know they are serious and capable buyers

As Joel said way to many dreamers out there. Time is limited and I'm only going to spend it on those that are worth it.

The type of POF. Letters matter as well. I get calls from people all over thecountry who want to "fix & flip" & their POF is one of those letters that anyone can obtain by doing a Google search of POF letters......No thanks ill pass.

Clay Smith · Answer

First off, this agent is either a very successful investor friendly agent who can be picky about their clientele; OR they are not investor friendly and are not goign to waste their time deviating from owner occupant home owners to appease an investor.  Either way providing proof of funds to an agent is perfectly acceptable, whether you choose to jump through this hoop is up to you.

Personally, i would only work with them if they are investor friendly and knowledgeable.  In order to identify them as investor friendly look for these traits:

• they market themselves as Short Sale Specialist
• they market themselves as Distressed Property Specialist
• Good reputation or referral with other investors (call them, do not just ask)
• Active member of local REIA
• Knows local Hard Money lenders
• knows how to find non MLS deals and brings you them sometimes

Do NOT use just one Realtor.

Rick Bassett · Answer

They probably want to make sure that you're for real and not wasting their time (or tying up properties with no ability to close as previously mentioned).

Getting a Realtor to feed you good deals is tricky as there are a lot of RE investors and wannabes running  around. Realtors will provide the best deals to those who have the ability to close quickly without drama/issue.

It's really a 2-way street and they will feel more comfortable with providing you deal opportunities after you prove yourself and do a deal or two with them.

It took me awhile but I've now got 4 or 5 Realtors that me first crack at deals when they come up.

Dumb question: My Realtor wants proof of funds why?

Most Popular Reply