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Elizabeth Weintraub

Why Sellers Demand Proof of Funds

By January 2, 2013

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It's not unusual for a purchase contract between a buyer and a seller to contain a requirement for the buyer to produce proof of funds.

Some buyers think their proof of funds is nobody's business and resent the intrusion. But when you think about it, why should a seller agree to take the house off the market if the seller doesn't know whether the buyer can actually perform? Of course, a loan officer can verify in writing that the buyer has the money; however, the seller might still want to see hard, cold evidence.

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At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.


January 6, 2013 at 10:32 pm
(1) Neil Pluister says:

Seller requesting proof of funds in Northern Wisconsin real estate has become normal and if you think about it in all fairness they are only asking for proof of an agreement you proposed in an offer, which of course would be the money!

I don’t think this is more than asking for a loan commitment letter for an offer with financing. Agents need to let the buyers know this up front prior to writing and or submitting an offer. Agents should have an idea of how a buyer is going to fund a purchase prior to finding a property through discovery which also is a perfect time to plant the seed of advice that a buyer needs to know and be prepared that it is normal for a seller to ask for proof of funds in today’s market so that this does not become an issue in a counter offer. Letting a buyer know up front of how things are working in today’s market also shows the buyer why he needs your knowledge! Agents don’t need this to raise a buyers blood pressure in a tense negotiation during the counter. Knowing this up front is one lest thing to worry about negotiating in an offer and or a counter offer.

Neil Pluister
RE/MAX First

January 8, 2013 at 9:47 am
(2) Carol says:

My bank, CitiMortgage has been dragging their feet for 7 months on a Short Sale. I am the seller. Why is it that when the buyer signed the contract, Citi didn’t ask for proof of funding? They have drug this out for 7 months now and only last month told the buyer’s agent that they wanted proof of funding. They’ve done approx 5 appraisals on the property, have asked me for every piece of information about me, except for the birth certificats of my children and after getting my Congressman and The Comptroller Of The Treasury involved, still have no firm answer about my short sale. 6 different contracts have been lost due to them not responding in a timely manner. This last one has hung on for 7 months……..I don’t know how much longer he’ll be around. Is there no time limit set for a bank to do a Short Sale approval or denial?

January 8, 2013 at 11:03 am
(3) Elizabeth Weintraub says:

With some types of federal short sales there are time limits, but there are also ways to circumvent those time limits, which makes the limits pretty much useless.

My experience with CITI varies. Years ago CITI was pretty fast but lately many short sales have been dragging out.

As for POF, banks generally want them dated within the past 30 days. Many documents expire in a short sale because of the length of time.

January 13, 2013 at 10:06 am
(4) nevermind says:

Is your loan current? if so, it is not a priority. the loan needs to be 60 or more past due. This is not the banks fault it is the rule of the investor. (freddie, fannie, fha) Ask your lender who your investor is and look up the short rules online. There are time tables; however if the packet is not complete the process will sit. Find a realtor that is a short sale expert and KNOWS the packet that is needed and knows how to move the process.

January 13, 2013 at 10:53 am

Investors such as Fannie Mae and Freddie Mac no longer require loans to be in default to do a short sale.

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