Hi everyone, im 22 and i am going to start out being a wholesaler. The question i have is if im wholesaling and the seller ask me do i have proof of funds what answer should i give the seller? Im asking this question because i know some day down the road im going to be asked this question and i dont wont to look like im unprofessional…
thankx…
Howdy Focusonmoney:
Get proof of funds either cash in the bank or a private investor or a mortgage committment letter from a conventional lender or hard money lender. You can get prequalified by many lenders before you have a particular property. This prequalification is as good as proof of funds to most REO sellers. The question will come up and probably before you even get an offer presented to a REO seller.
so do i get proof of funds on my part or get proof of funds from the investor im wholesaling it to? And also if i dont have proof of funds when i persent an offer can i state in the contract “Within 48 hours, buyer shall provide seller with buyer’s complete financial and credit information for seller’s approval”. But how would that would work out if im not really the buyer im just wholesaling it? What should i tell the seller?
thankx for help…
Howdy Focusonmoney:
The answer depends on who your seller is. If it is a bank they do not want to see you doing a wholesale deal. They will want your proof of funds and not your buyers and not your financial information unless they are willing to finance the sale.
If you are dealing with a homeowner anything may be possible. There are no real quidelines as each seller is different.
Banks and REO sellers have been burned by new investors who read one book and got properties under contract and tried to flip and had no idea how to complete the sale. This costs banks and Realtors time and money. You will also run into addendums to the contracts that will not allow you to assign your contract.
To be a true wholesaler you may have to take risks and even close on contracts that you can not flip.
It aint easy dealing with REO sellers. They want to sell to buyers who can close deals. It can be done successfully but the rules have changed making the game more difficult for flipping property without the ability to close yourself.
So do you think its good to tell the seller up front that you are wholesaling the deal? And also can i request for the seller to give me 48 hours to show he/she proof of funds of the investor im dealing with?
thanks for your help…
Howdy Focuson money:
It will be a cart before the horse on some deals. You will find buyers and get proof of funds and letters of approval from them before you even find them a deal to look at. Some sellers will give you the 48 hours and some will tell you to go away until you have all your stuff. They may instruct the agent to hold everything until you have the proof.
I have seen deals where the seller knows the buyer is reselling the property and I have seen where they did not know. Perhaps some other wholesalers will be able to step in here and give their advice and examples of how they do deals. I actually have only done a few of these myself and have only bought a few from wholesalers too.
thanks for your help u have been helpful… I have one more question if you dont mind… My question is what is the worst thing that can happen if you and the seller tie up a deal on contract and for some reason the investor that you assign the contract to couldnt close at the closeing date??..
Howdy Focusonmoney:
Pretty much the worst that would happen is to lose the earnest money. You could even get the investor to put that up.
Other options include getting an extension of the closing date of course.
Both parties to the contract need to sign the release of earnest money which can sometimes give you leverage to at least split the refund 50/50 between the buyer and seller.
thanks so much u been helpful… 