How to decide if a cash buyer is legit

Question

I’m doing my first wholesale deal and I’m trying to decide if I can trust certain buyers, what are some things to watch out for.

Justin Vogelgesang · Answer

@Ismail Sogbaike ask them for a proof of funds. A serious investor will not typically withhold that information if they're claiming to be a cash buyer.

Russell Brazil · Answer

See if they know the secret 2 legit handle signal

David Ramirez · Answer

1) POF2) NON-REFUNDABLE 5K EMD 3) Check entity status and years in business4) Ask for the address of the last investment properties.

John O'Leary · Answer

Like @Justin Vogelgesang said, ask for proof of funds, and use sites like propstream or batch leads to see if they have bought any other properties "cash". Make sure they are not another wholesaler like New Western.

Account Closed · Answer

@Jay Hinrichs:  A letter like that would work just fine. 

The concern would be all of the "subto community's" participants. They say they are having a great time, but since almost all are new investors, pulled in by the hype that Subject To is "no money down" and "you don't need money to wholesale", they believe that. But, bottom line, they are broke. They have no money. Subject To costs money to do legally and wisely.

The "subto community" are using these downloadable Proof of Funds letters to convince an unwitting seller into signing a contract, which they will then go out and try to find a buyer. It seems a tad bit dishonest.

They say at the Facebook page, Proof of Funds will be provided if needed, for a fee, but there is nothing indicating which bank account the money is coming from or how much is in it. It’s just a fake, made up Proof of Funds. 

I have a property listed as FSBO right now on Zillow and I have been inundated with "wholesalers" who can't prove they have two nickels to rub together. When I ask if they have financing arranged, they say they "can get a Proof of Funds". When I say I want to see their name on the account or a phone number to their banker, they stop bothering me. There is only one reason I can think of for that occuring. It is only a fake POF.

This is not theoretical to me, it's experiential and a real time waster. I’m trying to be nice and encourage the actual investors, but this kind of thing sure gets old.

Account Closed · Answer

I agree to disagree.

Account Closed · Answer

There are websites where you can buy "Proof of Funds" for the amount of your choice for $50.

Melissa Nash · Answer

Proof of funds? List of experience and personal and business referrals??

Jerryll Noorden · Answer

You make them put down a $2K non-refundable earnest deposit into escrow as a cashier's check. If you have a legitimate good deal, the real cash buyers will easily put that down. The others won't.

How to decide if a cash buyer is legit

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