What is Proof Of Funds in real estate?
Requiring proof of funds from prospective buyers is a critical qualification step and filter to protect you from wasted time and unnecessary headaches. The last thing you want to be doing is wasting time with a buyer who is not qualified or even purposely misleading you.
Valid proof of funds:
- Online banking screenshot
- Bank account statement
- Brokerage account screenshot
- Brokerage account statement
- Pre-approval or pre-qualification letter from lender
- Commitment letter from hard money lender or private lender
It is understandable for prospective buyers to resist sending proof of funds due to lack of trust. When verifying proof of funds, we encourage buyers to redact any information they deem sensitive. Requiring proof of funds will eliminate wholesalers who tell you they are cash buyers but they really don't have money or intention to buy your property.
Additional Verification: Credit Report
To go one step further with buyer verification, in order to ensure a prospective buyer is qualified to purchase without delays or significant risk of breaching the contract, you can require buyers to provide a credit report. This is especially helpful if the buyer will be using a lender and their pre-approval or pre-qualification letter lacks credibility.
