I ended up chickening out and backing out of the contract, and I lost my $500.

:chicken:

Sugggested price-$155-165K: Completely tiled w/18 creamy tile.Door opens to a large living room with a fireplace Opposite the front door is a large window to the rear yard.

His response to that lands somewhere between annoyance and exasperation, but he basically told me to call him back when I get a purchase contract in place.A conversation I had with the next private lender I contacted basically went the same way.So, it looks to me like a case of chicken or the egg: My real estate agent won't put in the offer without a proof of funds letter, and the private lenders I've spoken to won't approve me and/or provide a proof of funds letter without a purchase contract.What am I missing here?

Funny about your chicken reference. 

It's the typical "chicken" or the "egg" situation.

Remember Chicken Little?

As my hero The Reverand Wright likes to say: The Chickens Have Come Home to Roost!

Why did the chicken cross the road?

Their parents bought this 5 acre farm in 1942, they grew up on the land, had cows, pigs, chickens, goats, gardens, etc.