Proof of funds letter for Estate Agent

kaji · 30-09-2018 9:01pm #1

Hi. Newbie to all of this and find it daunting.

I'm currently bidding on a house and I'm apparently the top bidder at the moment. The Estate Agent has asked me to provide a proof of funds letter. I'm just caught a bit by this as the amount of my current bid is beyond what I can afford on paper, my parents were going to give me the last bit of money. So I'm wondering what I ask from the bank providing the mortgage to write- do I have to tell them what the current bid is at or just a general 'mortgage approved for X'?

Thanks

Tow · 30-09-2018 9:04pm

Don't hive them anything, it will be used to bump up the price.

amcalester · 30-09-2018 9:06pm

Redact the finance amount and give that to the EA, none of his business how much finance you have in place, how much of a deposit you have or how much of a gift you are getting.

kaji · 30-09-2018 9:10pm

So it's not common practice? I'm guessing I could ask the bank to not say how much I have but to say I have approval? I dunno how it works

mugsymugsy · 30-09-2018 9:14pm

amcalester wrote: »

Redact the finance amount and give that to the EA, none of his business how much finance you have in place, how much of a deposit you have or how much of a gift you are getting.

This is what we did. Don't show your cards to the estate agent they work for the seller and not you!

CramCycle · 30-09-2018 9:18pm

As above, just say no or if you think it is a deal breaker, black out the amount, so it is essentially a worthless piece of paper. The only reason to ask for it is to see is there wiggle room in another "bidder" arising.

There is simply no need for him to have this, only when and if he accepts your offer, do you need to present a holding/booking deposit, aside from that he can go swing.

Sleeper12 · 30-09-2018 9:24pm

Very common practice.
You are the top bidder but they want you to prove that you are a serious bidder. I've been a cash bidder before and had to show bank statement with the funds to support my bid.

If you don't prove that you can afford the bid you will just be knocked out of the race and the next highest bidder will become the highest bidder

I don't understand the logic in the other poster saying that by proving that you have the funds that you already told them you have will push the price up. You already told them that you have this money.

Get whatever from your lender. A letter or whatever. Get letter from your parents stating that they are giving you the money and a bank statement from them showing that you have the money.

Edit : at the end of the day they are only asking for proof of funds to consider you a serious bidder

Saints#33 · 30-09-2018 9:31pm

I was asked for this last month.

My advice is simply transfer any other amount than required to another account, screen shot the amount and then transfer it back in.

snowcat · 30-09-2018 9:36pm

Just write a cheque for a big sum to your account. Blank out all the details and the sum will show up a a balance. Simples. Done it a few times. I could afford the purchase but did not have the balance in my account. Cheque will bounce but so what. Got a few receiver sales cheap with this method

You will need the funds to pay the sale from somewhere else..otherwise you are wasting peoples time

CramCycle · 30-09-2018 9:38pm

Sleeper12 wrote: »

Very common practice.
You are the top bidder but they want you to prove that you are a serious bidder. I've been a cash bidder before and had to show bank statement with the funds to support my bid.

Surely if your bid is high enough they will accept it, then you pony up the deposit. There is absolutely no need for this letter. If your not serious, this will be apparent as soon as they accept your bid and ask for the deposit.

snowcat · 30-09-2018 9:41pm

CramCycle wrote: »

Surely if your bid is high enough they will accept it, then you pony up the deposit. There is absolutely no need for this letter. If your not serious, this will be apparent as soon as they accept your bid and ask for the deposit.

You dont understand the sale process

delly · 30-09-2018 9:43pm

I remember asking for this back in 2005, as I was in a chain and had two bidders on my house. It wasn't a case of bid value, it was a case of getting the bidder who would close the sale quickest.

snowcat · 30-09-2018 9:48pm

delly wrote: »

I remember asking for this back in 2005, as I was in a chain and had two bidders on my house. It wasn't a case of bid value, it was a case of getting the bidder who would close the sale quickest.

Not many people even wealthy people have 1/4 million sitting in their bank account. It could be argued that you would be very stupid having lots of money in your bank account. Wealthy people are not in the habit of leaving their money in bank accounts earning .2% interest

Sleeper12 · 30-09-2018 9:50pm

CramCycle wrote:

Surely if your bid is high enough they will accept it, then you pony up the deposit. There is absolutely no need for this letter. If your not serious, this will be apparent as soon as they accept your bid and ask for the deposit.

No. They have no time for time wasters. If you can't prove that you have the finances then you will be forgotten. Why wouldn't you prove what you claim to have?

What disadvantage do you think you will have by showing that you have what you already have claimed to have?

You don't have to show them a penny more than you have claimed to have.

OP I am part of a consortium that owns rental property. We have bought & sold many times over the last 25 years or so. This is common practice. They are only asking you to prove that you can back up your bid. There is absolutely nothing wrong with that. You already showed your hand when you made the bid.

denismc · 30-09-2018 9:50pm

We were asked for this when we bought our house, it seems to be common enough.
The problem is there are people who will bid on a house who don't have the finance in place, if the estate agent accepts an offer from such a bidder there is a risk that genuine bidders will go elsewhere and the whole process will be drawn out .
A letter from your solicitor or bank should be acceptable, you don't have show them how much you have.
When we did we just showed them the loan offer we had from the bank and they were happy with this.

denismc · 30-09-2018 9:54pm

Sleeper12 wrote: »

No. They have no time for time wasters. If you can't prove that you have the finances then you will be forgotten. Why wouldn't you prove what you claim to have?

What disadvantage do you think you will have by showing that you have what you already have claimed to have?

You don't have to show them a penny more than you have claimed to have.

OP I am part of a consortium that owns rental property. We have bought & sold many times over the last 25 years or so. This is common practice. They are only asking you to prove that you can back up your bid. There is absolutely nothing wrong with that. You already showed your hand when you made the bid.

There is a bit of an echo in here

Sleeper12 · 30-09-2018 9:56pm

denismc wrote:

There is a bit of an echo in here

I've had trouble with boards.ie all day today. Trying to delete now

kaji · 30-09-2018 9:57pm

OP here. So if the bid was for 300,000 let's say, and I have mortgage approval for 230,000 and 60,000 savings and 10,000 in another account as a gift from my parents, do I go about getting all of these as statements separately or do I show them all to the mortgage provider and let them say that I can afford the 300,000?

snowcat · 30-09-2018 9:57pm

Sleeper12 wrote: »

No. They have no time for time wasters. If you can't prove that you have the finances then you will be forgotten. Why wouldn't you prove what you claim to have?

What disadvantage do you think you will have by showing that you have what you already have claimed to have?

You don't have to show them a penny more than you have claimed to have.

OP I am part of a consortium that owns rental property. We have bought & sold many times over the last 25 years or so. This is common practice. They are only asking you to prove that you can back up your bid. There is absolutely nothing wrong with that. You already showed your hand when you made the bid.

I am also involved in commercial property. Like everything in life if they want to disregard someone with unconfirmed funds they are lowering their potential return. Showing your hand is not necessarily good. Horses for courses

Sleeper12 · 30-09-2018 10:02pm

snowcat wrote: »

I am also involved in commercial property. Like everything in life if they want to disregard someone with unconfirmed funds they are lowering their potential return. Showing your hand is not necessarily good. Horses for courses

Estate agents dont see it that way

Wasting weeks with op only to discover that they dont have funds they might lose a genuine buyer

Can you explaining why showing what you already claimed to have is a bad move? You are not showing more than your bid. Not showing more of your hand.

Your logic makes no sense at all & may cost OP the property

denismc · 30-09-2018 10:03pm

kaji wrote: »

OP here. So if the bid was for 300,000 let's say, and I have mortgage approval for 230,000 and 60,000 savings and 10,000 in another account as a gift from my parents, do I go about getting all of these as statements separately or do I show them all to the mortgage provider and let them say that I can afford the 300,000?

I would just show these to your solicitor and get them to write a letter confirming you have the required funds.

Sleeper12 · 30-09-2018 10:05pm

kaji wrote: »

OP here. So if the bid was for 300,000 let's say, and I have mortgage approval for 230,000 and 60,000 savings and 10,000 in another account as a gift from my parents, do I go about getting all of these as statements separately or do I show them all to the mortgage provider and let them say that I can afford the 300,000?

OP it doesn't matter how you show it. All in one account or three separate accounts. Makes no difference. You most likely haven't engaged a solicitor yet but quite often you can show proof of funds to your own solicitor & they will send a leter stating that you have the funds

CramCycle · 30-09-2018 10:11pm

snowcat wrote: »

You dont understand the sale process

I have been through it both commercially and personally so I know it well enough

Sleeper12 wrote: »

Estate agents dont see it that way

Wasting weeks with op only to discover that they dont have funds they might lose a genuine buyer

But they are not wasting weeks, OP is highest bidder, they either accept the bid or they don't. If they accept, they give a deadline to get the deposit in the door. After which it is a bit of faffing about with snag lists etc until they have to sign contracts, and the other deposit comes in presuming a typical mortgage.

They are only wasting weeks if they are trying to screw the buyer (which fair enough is a side effect of trying to get the best price for their client).

Can you explaining why showing what you already claimed to have is a bad move? You are not showing more than your bid. Not showing more of your hand.

It depends is the EA asking for proof of deposit or proof of mortgage. If you show a letter claiming you can afford a mortgage 50k more than you have bid, there will always be some doubt (and I am sure only a minority of estate agents do this) that the next bidder against you isn't there.

Your logic makes no sense at all & may cost OP the property

Maybe but i don't see the harm in the OP asking are you accepting my bid, if you are I'll have proof here in the morning, if your not, why should I bother.

I was never asked for this letter but several friends were, some handed it over, some didn't, it really didn't seem to make a difference to the process.

kaji · 30-09-2018 10:12pm

Sleeper12 wrote: »

OP it doesn't matter how you show it. All in one account or three separate accounts. Makes no difference. You most likely haven't engaged a solicitor yet but quite often you can show proof of funds to your own solicitor & they will send a leter stating that you have the funds

I have asked a solicitor by email if he can represent me should the sale proceed and he agreed to it. I guess I should actually call in to him as have never met him.

Sleeper12 · 30-09-2018 10:14pm

snowcat wrote:

Not many people even wealthy people have 1/4 million sitting in their bank account. It could be argued that you would be very stupid having lots of money in your bank account. Wealthy people are not in the habit of leaving their money in bank accounts earning .2% interest

You miss read the post. Estate agents only want proof of finance. This do not have to be cash sitting in a bank. Though usually cash buyers do have it sitting in the bank if they are bidding on a house. Pointless having it tied up in a 12 month investment account when you are ready to spend it.

All the estate agents want is proof. This can be statements with cash in the bank, a letter from the solicitors or just a letter from the bank or lending institution

CeilingFly · 30-09-2018 10:25pm

CramCycle wrote: »

Surely if your bid is high enough they will accept it, then you pony up the deposit. There is absolutely no need for this letter. If your not serious, this will be apparent as soon as they accept your bid and ask for the deposit.

If I were the seller, I'd be going for the best bid.

The best bid is not always the highest bid.

No chain / cash buyer / someone that can show they can complete the deal.

Also, are you over bidding? Market in Dublin is flat, people are being cautious. Banks are being cautious too.

Take a step back and maybe get an independent view

Sleeper12 · 30-09-2018 10:25pm

kaji wrote:

I have asked a solicitor by email if he can represent me should the sale proceed and he agreed to it. I guess I should actually call in to him as have never met him.

He'll reassure you that this is standard practice and no harm in it at all.

delly · 30-09-2018 10:34pm

snowcat wrote: »

Not many people even wealthy people have 1/4 million sitting in their bank account. It could be argued that you would be very stupid having lots of money in your bank account. Wealthy people are not in the habit of leaving their money in bank accounts earning .2% interest

Not actual cash in bank obviously, but a letter from the relevant bank or building society. Back in 2005 we took the word of a financial institution very seriously...

august12 · 30-09-2018 11:22pm

kaji wrote:

OP here. So if the bid was for 300,000 let's say, and I have mortgage approval for 230,000 and 60,000 savings and 10,000 in another account as a gift from my parents, do I go about getting all of these as statements separately or do I show them all to the mortgage provider and let them say that I can afford the 300,000?

You would need to show more than this, you have to cover stamp duty and legal fees, that would add at least another 5,000.

Fol20 · 30-09-2018 11:27pm

snowcat wrote: »

I am also involved in commercial property. Like everything in life if they want to disregard someone with unconfirmed funds they are lowering their potential return. Showing your hand is not necessarily good. Horses for courses

It’s very common practice in buying and selling due to time wasters. If your worried about it. Ask your solicitor to prepare a head doc indicating you have x funds, so for example if your current bid is 300k. Then if you wanted to be exactly precise. You could get the head letter to indicate that exact amount

The_Conductor · 01-10-2018 6:53am

A property in the development I'm living in (small development of 23 units) has re-entered the market 3 times this year due to finance falling through on the part of prospective purchasers- and has gone sale agreed again (for a slightly lower amount) in the last forthnight. The seller- meanwhile- who was hoping to buy elsewhere in the neighbourhood (her circumstances have changed)- has had to withdraw from her prospective purchasers. Both sides of her equation- were being handled by the same harried estate agent in Lucan village- who would bite your hand off at this stage- to take clients who are a) able to prove funds and/or b) not in a chain.

The ability to prove funds is not what it once was- and now, in the main, is considered to be a solicitors letter acknowledging that you are in the process of purchasing a property and stating that you have access to the funds necessary to complete the process (at the sums currently advised to the solicitor). At the end of the day- the make up of the funds is immaterial to a seller- what matters is whether they are going to get paid what they are supposed to be paid- when they are supposed to be paid.

99% of this is common sense- and simply people covering their arses- which in the current world- is prudent.

Proof of funds letter for Estate Agent

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