Why does my real estate agent want a Proof of Funds Letter?
Posted on March 17th, 2010 in Renting & Real Estate | 6 Comments »
Katie M asked:
My real-estate agent (whom also is representing the seller on this particular property) is asking us for a Proof Of Funds letter. Is this unusual? Why should we let the representative of the seller know how much money we have in the bank, as I think that would impact our leverage in negotiations because the seller and the sellers agent will know how much we could possibly afford? Opinions?
Carboxytherapy, Stretch Marks Removal
My real-estate agent (whom also is representing the seller on this particular property) is asking us for a Proof Of Funds letter. Is this unusual? Why should we let the representative of the seller know how much money we have in the bank, as I think that would impact our leverage in negotiations because the seller and the sellers agent will know how much we could possibly afford? Opinions?
Carboxytherapy, Stretch Marks Removal
6 Responses
fair trade coffee
Get a letter from your bank certifying you have the ability to pay the down payment and the ability to qualify for a loan. No details need be given. Seems to me the sellers would be tickled to death sell their house in this environment.
Healthy colon cleansing
Katie keep in mind this Realtor has a legal obligation to protect the seller, not you! As for proof of funds, it’s like a qualifying letter from a lender. Documentation that says you are qualified to purchase the property. It’s normal. But DO NOT give them any information your motivations. The Realtor is could use information you give them against you.
Westlake Village Homes
You have to prove you can afford the house. However, you do not have to have a proof of funds letter. You can have a qualification letter from your lender. Additionally, you need only show that you have your downpayment, not show every cent you own. You should not allow the seller’s realtor to be yours, too. There is an inherent conflict of interest there. Insist that another agent in the brokerage be appointed as your exclusive buyer’s agent. Additionally, do not write an offer unless you have engaged a lawyer.
From your question, it appears to me that you are a first time home buyer. You need to do your homework before you buy a house, or you can get really burned.
Thermage Stomach
unless it will absolutely kill your deal……..
find today or Tuesday, a buyer’s agent and never ever again
let an agent rep you and the seller concurrently.
I am presuming a POF is for a commercial deal.
a seller does have the right to know that the buyer
can qualify; US supreme court judgments.
Beyond that, the seller has no rights.
Boston Real Estate
This is customary in a sellers market to weed out the people who look and don’t buy. If they don’t have prequalification for a loan, no one wants to waste their time showing the property.
Brigantine Real Estate
First, it’s a terrible idea for you to be working only with the seller’s real estate. That’s called dual representation. It’s legal. Some agents do it. And, with full disclosure, it’s fully in compliance with Realtor code of ethics. So nothing dishonest or unethical is going on. Still, it really means you don’t have an agent. You don’t have someone representing you. It’s a bad, bad place to be in.
And it doesn’t just affect negotiation. Who are YOU going to ask to find out how much the property is worth? The seller’s agent has provided input to the seller, and the seller’s set a price. Maybe it’s reasonable. Maybe it’s not. You NEED to be able to ask someone for a CMA (competitive market analysis) to determine what a fair price for the house is. The seller’s agent won’t (and ethically can’t) give that to you.
Second, it’s not unusual for an agent to ask for a proof of funds letter. It’s done frequently. The agent (and the sellers) want to have some assurance that you can actually afford (will be qualified to buy) the property.
However, the other advice about what to reveal in a proof of funds letter is good. You don’t want to reveal too much. It’s the same as if the agent asked for a prequalification or preapproval letter. The best thing to do in those cases is to have your lender prepare a letter just for that property, stating that you are prequalified or preapproved up to whatever your offer is. So, let’s say you’re really prequalified up to $400,000. But you’re making a bid of $350,000 on a property. You don’t want the seller to know that you can actually go up to $400,000. So you ask your lender to write a prequalification letter for $350,000.
Again, you’re in a bad situation.