Wholesaling - Proof of Funds

[Omar Barazi]

I'm looking to break into REI with wholesale deals as a way to raise capital for personal investment properties.

When it comes to getting a seller to sign a purchase agreement, how are wholesalers showing POF even though they plan to assign the contract? Do they use hard money lenders as proof? Or are wholesalers not required to show POF if the seller isn't directly requesting POF?

Thanks

[Taylor E.]

So unlike some, I will present an answer that's genuine without as much salt or snark attached. 

The Proof of Funds (POF) requirement depends on the type of seller you're dealing with.

Typically, with on-market deals, the agent WILL request not only POF but an Earnest Money Deposit (EMD) to call your bluff and make sure you are legitimately interested. The agent is licensed and will likely not risk that license by dealing with an unsubstantiated offer from a middleman that doesn't have to be as legally accountable AND is going to ultimately make more than them. (Now you see where the jealousy concern towards wholesalers from real estate professionals come from.)

If you are dealing with something that is off-market, the seller is usually a layman stuck with a property that isn't in market condition and/or doesn't want to pay real estate agent commissions. They also may need to close quickly without all of the formal appraisals and inspection contingencies. These deals are where a seller may not require POF either because (1) they don't care or (2) they don't know to ask for it.

This is simply a don't-ask-don't-tell situation. (It also comes to your sales and negotiation skills.)

If you have POF and POF is requested, provide it. If you don't, you may be able to get a formal POF from your end buyer (like putting in the contract POF and EMD are due at the end of the inspection period). I wouldn't suggest using basic template letters that are easily purchasable/acquired from popular online gurus. If you used it, I can guarantee thousands of others have. People that are familiar with the industry are going to be more likely to see through it (and see that you're a beginner). I also wouldn't suggest using soft proof of funds because it's like doing half of something. Either you have the money or you don't.