Beyond their often-hasty willingness to pay far more than the asking price in the current fast-paced real estate market, today’s buyers are creating videos, sending photos, and writing “choose us” letters to encourage sellers to accept their offers. What they should not be doing is providing the now almost universally asked for proof-of-funds (POF) documentation, as part of a Purchase Offer or Binder package.
Simply put, the disclosure of sensitive financial documentation about one’s bank balances, brokerage accounts, net worth and income to real estate brokers, salespersons, and even sellers is a dangerous practice that can seriously jeopardize the privacy of the potential buyers and might very well open a pathway to identity theft and fraud. Without a doubt, sellers should be able to have a strong sense that the potential buyers can perform, but this should be a matter for the party’s lawyers to work out once an offer is accepted, and the deal is moving to the contract stage of the transaction. There are many ways to verify a buyer’s ability to complete the transaction, in an all-cash, or even a mortgage-contingency transaction, and these can and should be able to be accomplished on a lawyer-to-lawyer basis, as part of the contract drafting and negotiation process. This can also be accomplished by the buyer providing reasonable POF to the seller’s lawyer along with standard specific confirmatory and binding representations and warranties in the contract.
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