Do I have to show proof of funds, in order to take a tour of a house for sale? The realtor advised that I needed to provide this information...

Asked by Kathleen And Michael, Orlando, FL Wed Dec 28, 2011

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22
Tom Priester, Agent, Tequesta, FL
Thu Dec 29, 2011
BEST ANSWER
Kathleen and Michael,

It is somewhat unusual for proof of funds to be required before touring a home unless it is a multi-million dollar property. As a cash buyer most sellers will want proof of funds submitted with an offer so they know the buyer is capable of closing on a home prior to taking it off the market. Keep in mind that a cash offer does not disqualify a buyer from obtaining a mortgage it just means there is no contingency for financing. There are a myriad number of ways that a cash buyer may not have proof of funds and still be fully capable of closing the transaction; for example borrowing money from a relative, refinancing a primary residence, waiting for a probate court to distribute assets, the list goes on.

You will find on short sales and bank owned properties that the seller will not consider an offer unless it is accompanied by an acceptable proof of funds. It is our job as Realtors® to pre-qualify our clients to ensure that we are making the best use of their time as well as ours. If you are looking at foreclosures you will find that if they are priced well and in good condition they will sell very quickly so it is a very good idea to have your proof of funds ready to go as any delays can cause you the opportunity of getting the property under contract.

I hope this information is helpful but if you need anything additional please do not hesitate to give me a call.



Always at Your Service,


Tom Priester e-PRO
"Results Driven Real Estate"

Keller Williams Realty
561 308-0175
tom@tompriester.com
Web Reference:  http://www.tompriester.com
0 votes
Robert Guth, Agent, Cape Coral, FL
Thu Feb 27, 2014
My answer will sound slightly snotty, but I believe consumers deserve direct, honest answers.

The answer is "no", you do NOT have to provide proof of funds or a pre-qualification letter to your Realtor. But......Realtors also do NOT have to put you in their car, spend hours taking you to see homes, or help you in any way. Realtors are not a governmental entity, required to perform a task for consumers. The relationship between buyer and agent should be mutually beneficial, built on trust, with both parties willing to demonstrate to each other, their commitment to the process of finding a home. A Realtor's background can be examined. Consumers have ample opportunity to research and diligently seek out an agent they can trust. So, it is not out of line in any way to ask that the buyer demonstrate the fundamental ability to actually perform. In easy speak....we want to know that you can actually buy, and aren't just using our services, time, and money to get a free city tour, or settle your housing curiosities. We have NO problem spending hours and hours doing exactly that, but, we like to know that we aren't having our leg pulled. Imagine working at your job, and at the end of the week when no paycheck shows up, your boss says: "sorry, I don't have any money to pay my employees". Wouldn't you like to have known that BEFORE working for that individual. And remember, agents have husbands, wives, children, etc. Asking them to devote time to you, surely shouldn't be soured by simply needing to provide proof that you can actually buy.

Another reason is that seller's deserve to know that strangers coming into their house, have at least exposed to their agent who they are, and that they can actually purchase the homes they are looking at. Imagine selling your home. How would you feel if you found out someone was just in your house, got to see all of your personal belongings, learned whether you had a security system or not, just to find out they have a history of never paying debts, no money in the bank, and zero chance of actually buying your home? It would sicken most people. So, our job is to also help protect our consumers.

A 3rd reason is that if/when you are going to make an offer, you will have to provide the proof of funds or pre-qualification letter to even be considered. So if a buyer is calling on an agent to see homes, isn't it reasonable that this information be provided up front? If you are wanting to look at homes, then it should be because you are ready to buy. Correct? Anything less would be just using an agent to show homes for curiosity, which means you would be asking someone to spend time and money, with no chance of compensation. If you want to look at homes, it should be because you are ready to make an offer. To make offers, that information will be required. Not wanting to provide such info basically lets the agent know you are not actually serious.

Trust....I had a prospect who said: "My information is personal, and we don't know each other." Sure. But that goes both ways. They were fine with getting into my car though, a stranger, and to spend a day with me though. So why should the trust be a one-way street? The husband made the mistake of actually blurting out: "We don't want to mess with that....we just want to look at houses". So think about that....asking for their proof of funds allowed me to expose the fact that they actually intended to use me as a free tour guide of my town, with no intention of making any offers. That is rude really. There is no reason to disrespect others that way.

Summary.....if one is serious about utilizing an agent to go see homes, it should be because they are intending to buy, should they find the right deal. To even make an offer, financials will be required. Not wanting to perform this standard task, tells the agent you are not serious. Because we do this for a living, and support OUR families with our services, there is nothing wrong with needing that proof up front.

If my response sounds condescending, or too blunt, my apologies. Again, I believe consumers deserve the respect of a direct, honest, uninhibited answer.
5 votes
Excellent reply and not "snotty" at all. In fact I shall be linking to this post on my blog... and a way to achieve this is to say to the buyer that the seller requests proof of pre-qual or funds before allowing the buyer into the home. The agent had to use his/her best judgement as to the buyers true intentions. Thanks Robert.
Flag Mon Feb 16, 2015
Evelyn Palad…, Agent, Saddle River, NJ
Mon Feb 29, 2016
Many interesting answers. Here in the state of New Jersey , Article 1 of the REALTORS Standards and Practice Article 1-1 we are pledges to protect and promote all interests of the our clients. When working as a Listing agent , it is important to check your company policy manual to see if there are any requirements set forth by your company as to how to handle these transactions . Differ to your company Broker as this information is critical . Then ask your seller to document these conditions set forth to protect you and your company from any liability that may arise from a prospective buyer that may have interest in the property and not have the proper documentation in hand. The first substantive meeting should indicate whether or not you will move forward with all your ducks in a row, having articulated both parties concerns . If you are working as a Buyers Agent inform your buyer , these are the procedures, if there is serious interest this will be understood and respected.
0 votes
Dkbaub, Home Buyer, Torrington, CT
Wed Jun 24, 2015
First, I had to sign a contract with the agent I am using to rely on them solely to look for a home for 6 months time. I was not happy about that. He is a brand new agent and I have had to endure one mistake after another. After a week with him, he went on vacation for a week. I have to drive over an hour each way to see the properties I am interested in. I use my own car and follow him. Today, after his vacation, he is home sick. I have had other agents who do not call back, do not send me listings other than their own, do not have walks shoveled in the snow, etc. NOW, I am asked to provide proof of funds.

I have been looking in vastly different areas (beach and country) for a home because I am not sure what kind of change I want for myself. I also am not sure if I want a condo or a house. I am entitled to this free thinking, free will. If someone is upset because I don't buy the second or the tenth home I see, then you need a different job. I am sure many people with lots of money may not end up as serious buyers. It would be hard to tell based on money alone. I don't find it thrilling to look at homes, it is also a job for me to find the right place for myself. I am not happy with all the "rules" these real estate companies are making. Pretty soon they will start limiting the amount of homes you can see before you have to buy. It is getting ridiculous.
0 votes
Angie Boggem…, Agent, Saint Louis, MO
Thu Jan 5, 2012
The owner probably requested it. It will be in your best interest anyway to have a pre-approval letter, so that when you find the house that you want to offer on you can submit it with your offer.
0 votes
Mikel DeFran…, Agent, Canton, MA
Sat Dec 31, 2011
Technically no... but the agent and/or seller probably want to weed out non-serious buyers. The thought being if you won't provide Proof of Funds ( or Pre-approval ) how serious of a buyer are you? Do yourself a favor... get a good buyer agent who is a Realtor, give proof of funds to them, then let them set the showings for you.
0 votes
Okay... so, a letter from a bank signed by the bank president that states that Mr. & Mrs. Hoffman have proof of funds showing that they can purchase a home in cash for up to 5 million dollars. So, outside or with that letter what else would be required by the realtor?
Flag Sun Oct 23, 2016
Okay.... So to give Proof of Funds, that would be a letter from the bank President stating that Mr. & Mrs. Kramer can afford to pay cash for a home up to 5 million dollars... So, what else would be needed in or with that letter???
Flag Sun Oct 23, 2016
Vincent Paige…, Agent, Orlando, FL
Sat Dec 31, 2011
This is normal practice. It is the seller's or seller's agent way of taking extra steps and assuring that you are a serious buyer, can afford it, and are not wasting everyone's time.


Highest and best regards,

Vincent Paige
REALTOR®| Century 21 Elite Home Finders
Certified BPO Specialist
5401 S. Kirkman Rd., Ste 725 | Orlando, FL 32819
Direct: 407.256.8190 | Fax: 407.264.8073
0 votes
Ray And Karen…, Agent, Mount Dora, FL
Fri Dec 30, 2011
Hi Kathleen,

THis is probably being done at the owners request.

I have this requirement on one of my listings.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Thu Dec 29, 2011
If purchasing with a mortgage, be aware that a mortgage pre-approval letter is required in order to determine your price range and for any offers to be taken seriously; if purchasing in cash, a bank letter stating proof of funds should be readily available; therefore not unusual for an agent, nor seller to request such information beforehand. Serious buyers should always be prepared, so not to lose a property of high interest because of a lack of proof of funds.
0 votes
Don Tepper, Agent, Burke, VA
Thu Dec 29, 2011
It depends.

If the seller made it a requirement that anyone touring his/her home provide proof of funds prior to the tour, then yes. That's a precondition. You'd have to comply.

There might also be a gray area. The seller might have made it a requirement that anyone touring his/her home provide evidence of ability to purchase. Proof of funds could be one way. A prequalification letter could be another.

Or maybe--as implied by a few of the earlier answers here--the agent is just tired of playing tour guide for folks with time to kill. If it's the listing agent, then no: If it's not a condition imposed by the seller, the listing agent doesn't have the authority to narrow prospects down that way. If it's your own agent, your own agent can say: "I don't take people around unless they show proof of funds." That'd be OK. And, as you can see from many of the answers, there are valid reasons for such conditions. However, if that's the case and you're sufficiently concerned about your agent's policy, you might want to consider your choice of agents.
0 votes
Javier Rodri…, , Orlando, FL
Thu Dec 29, 2011
Hello! The straight answer is that there are some buyers that use Realtors as tour guides to later find out the buyer is unable to purchase. In our organization we do not show properties unless we have a committed buyer that will follow our buying procedures one being proof of funds whether using cash or financing to purchase.

At the end of the day, would you like a buyer to use you as a tour guide? I am sure that the answer is no.

My recommendation is find a good Realtor from the many that use Trulia and use her or his services till the end.

Javier Rodríguez
Real Estate Broker, REALTOR ®
HouseStar Realty Group Inc.
Lic: BK703443
SFR Short Sale and Foreclosure Resource

: 407.429.5243 | Cell: 407.301.3401 | eFax: 407-830-5633
: jrodriguez@housestarrealty.com
: Main Office: 1033 Semoran Blvd Suite 245 | Casselberry, FL | 32707 USA
0 votes
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Thu Dec 29, 2011
There are several ways of providing proof of funds, most common is an approval letter from a lender. If you are paying cash it can be a little trickier. Do not give out copies of your bank statements without covering the account numbers/urls etc.

If you do not want to provide proof because you do not have the funds that is exactly the reason a good Realtor will ask for it.
0 votes
Nicole B. Tu…, Other Pro, Orlando, FL
Thu Dec 29, 2011
It is important that consistancy be applied here. To be fair, if this is the criteria, it must apply to all prospects.
0 votes
Antonio Vega…, Agent, Saint Cloud, FL
Thu Dec 29, 2011
It is normal for a seller to request that the agents showing the property verify their buyers have the necesary funds to buy it. I am surprised it does not happen more often.

A. Most owners would not like to have strangers walk into their privacy to look at everything, touch everything, take photos, etc (hopefully nothing gets broken or stolen) and then find out they could not even afford to buy it.

B. Why should an agent invest their time, effort and money in driving those unqualified strangers around to then find out they can only buy a 50K place instead of the 150K place they thought they would qualify for.

I will continue to ask for proof of funds and for pre-approvals before taking buyers out, that's a lesson I learned the hard way. I will also continue to tell buyer's when they will systematically lose all offers for trying to offer 10% less (as matter of principle) in any foreclosure they see, even when they don't want to hear it.

I have learned if the buyer cannot deal with my honesty and expertice of how the market works and what is required, they can find some newbee agent.

Tony Vega
Charles Rutenberg Realty
0 votes
Annette Law…, Agent, Palm Harbor, FL
Thu Dec 29, 2011
There may exist another point of view regarding situations like you describe. All real estate professionals are well advised to confirm their buyer is able and willing to purchase a home that meets their criteria. This is why the third question a real estate professional will as is "Do you have a pre-approval letter from your mortgage lender?"

Homeowners do not want to be a source of entertainment, but wish t sell their home to a qualified buyer. To often real estate professional skip the basics and show homes to unqualified buyers. By putting this REQUIREMENT in black and white, the agent is compelled to do their job. When everyone does their job, this seemingly unreasonable demand will create no problem at all.

I like being able to tell my sellers only qualified buyers will ever enter their home. I would like to keep it that way.

Annette Lawrence
Broker/associate
ReMax Realtec Group
727. 420. 4041
0 votes
Nina Harris, Agent, Williston Park, NY
Thu Dec 29, 2011
Yes. The seller obviously has requested that only serious buyers view the home. In the case of a cash buyer it would be "proof of funds". In the case of a non-cash buyer with a miniumum down payment it would be with a "pre-approval".

Good luck
Web Reference:  http://ninaharrishomes.com
0 votes
Mark LeMenag…, Agent, Lake Nona Orlando, FL
Thu Dec 29, 2011
This is Orlando and we do get a fair number of tourists who want to use our services as a free alternative to a day at the theme parks. So,it's a perfectly reasonable demand from a seller.
0 votes
Genevieve Ra…, Agent, Punta Gorda, FL
Thu Dec 29, 2011
Either is is a high end property or the Property owner wants to make sure you are a serious buyer.
Good Luck!
0 votes
Genevieve Ra…, Agent, Punta Gorda, FL
Thu Dec 29, 2011
Either is is a high end property or the Property owner wants to make sure you are a serious buyer.
Good Luck!
0 votes
Alys Esmond, , Orlando, FL
Wed Dec 28, 2011
Kathleen and Michael,

It is not at all unusual for Realtors to require that their potential clients be financially able to purchase the home(s) they are shopping for. The vast majority of sellers now require that an offer be accompanied by a recent loan pre-approval or proof of funds to close. It is not unreasonable for your Realtor to ask you for these items before you start shopping, because, otherwise, what is the point of you doing all the work of looking, choosing, deciding, weighing and falling in love with a property if you are not going to be able to place an offer?
Keep in mind that your Realtor is not going to be paid an hourly rate to take you to tour a house for sale, nor will they be reimbursed vehicle expenses. Realtors are only paid out of the commission paid by the seller to their brokerage. It is only fair that we know that you, as our clients are actually able to perform.
0 votes
Ann Ryan, Agent, Doral, FL
Wed Dec 28, 2011
This is unusual, but can occur in particularly high-end homes. Or, perhaps you just have an owner who is more interested in maintaining their privacy than in selling quickly.
0 votes
Terry Bell, Agent, Santa Rosa, CA
Wed Dec 28, 2011
A homeowner can set the terms of the sale! Perhaps the owner is not in a rush, or perhaps wants only serious buyers coming by! From what I hear, there is probably lots of other homes to see!
0 votes
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