Proof Of Funds

“How will you be paying for the property?” is a reasonable question to expect in a real estate transaction. When selling property, to qualify the buyers, sellers may inquire as to how the buyer intends to pay for said property, and the buyer may be asked to show evidence (known as Proof Of Funds) of the funds being available which may come in the form of cash or financing (a private or institutional loan).

If the buyer is using their own capital, then they would show asset statements from their bank, savings, or investment accounts. If the funding is a loan from a private party, then this may come in the form of a bank/asset account statement showing the available funds. If the funding is a loan from an institution such as a bank or hard money lender, then this may come in the form of a Letter Of Interest, providing the terms of the loan if it is approved.

While there are sources for generic Proofs Of Funds, it is best practice to work with the lender who will actually be funding the transaction. This helps avoid situations where the offer is accepted, but finding funding is a problem, and there are a number of benefits;

• The lender has reviewed the deal and verified the numbers, as well as their ability to fund

• If the seller / seller’s agent reaches out to verify the information, someone is available to answer them

• If the offer is accepted, the funding is available (barring unforeseen circumstances)