Email Elizabethproof of funds
Be on the Lookout for Fake Proof of Funds in Sacramento Real Estate
Sacramento sellers expect to see proof of funds with the offer for all-cash or large down payments.
Back in the old days of Sacramento real estate, nobody cared much about proof of funds. A lot of business was done on a handshake and, when I started in the business in 1974, via a one-page NCR contract. To put that time period into perspective, this was before most families even owned a microwave. But times change, and we quickly adapt to the times they are a-changin’. I can’t believe I ever survived in a world without computers and cellphones, but I obviously did.
Nowadays, people want proof of everything. There are no good-ol’ boy deals. We don’t trust anyone. Nor should we, necessarily. There are too many crooks and scam artists, just more sophisticated, and electronic crimes are becoming more complicated and commonplace. It seems like every day I get an email from somebody asking me to click on a link that is clearly a trick. I’m always on the lookout for fake crap, and I hold a duty to my sellers when I receive a purchase contract to check it out for red flags, one of which is often the proof of funds.
I don’t want my sellers to be subject to bogus transactions. We have enough of those buyers as it is, which is a whole ‘nother blog. The problem seems to be in part that buyer’s agents don’t bother to review the proof of funds they get from their buyers. They often automatically assume it is legit.
When we receive a cash offer, proof of funds had better accompany the offer or otherwise the offer is deemed worthless. Ditto with a large down payment. I know of one set of buyers whose down payment was coming from a particular kind of loan, so when they decided to change loans and suddenly could not longer qualify, they had to pay to cancel escrow or otherwise go back to that loan. They opted to pay to get out of the sale.
Some proof of funds arrive without an account holder’s name on the paperwork. That is not considered proof of funds. That’s nothing more than wasted paper to put through a shredder. Proof of funds should be liquid or relatively liquid, not an untapable retirement account, for example. Buyers can download a bank statement to their computer as a PDF or take a photo of a bank statement with their cell and scan it to their agent. Documentation is available instantly, pretty much.
There is just no excuse not to include proof of funds with a purchase offer anymore. But please make sure the name on the account matches the name on the purchase offer. A letter from the bank needs to be on letterhead. This Sacramento Realtor calls the individual who signs it and not through the number on the letter. If you’re buying a home as an LLC, we can’t take your personal savings account or your mom’s, for crying out loud. If it’s a check, that check should be printed with the individual’s name, with a check number. Be dated today.
Last year I recall an agent who submitted proof of funds that turned out to be a cashed deposit check, already sitting in another escrow. Don’t ask me how I uncovered that little fact, but I did. Saved my seller a lot of headache, and I will never suggest a seller do business with that agent ever again. That was deliberate. He could lose his real estate license for that kind of crap.
So don’t hate a Sacramento listing agent when she asks for proof of funds. It’s a requirement for most sellers and simply good business practice.
How an Elk Grove Home Buyer Hoodwinked a Buyer’s Agent
Google suspicious Elk Grove home buyers
This weird homebuying story has been turning over in my mind ever since it happened as I’ve been debating whether I should write about such a wild and wacky situation. Today I say what the hey. It might save another buyer’s agent in Elk Grove from humiliation. Certainly, it could put another Elk Grove real estate agent on alert as this criminal is still on the loose (he wasn’t reported to the police). Although, no seller wants to take her home off the market for a phony buyer who is playing a con game, either.
Most real estate agents in Sacramento and Elk Grove go about their business trusting other people to be who they say they are. We don’t normally need to verify identification or missions. If a buyer says she wants to buy a home in Elk Grove, typically she produces a pre-approval letter, specifies her wants and needs, and we show homes. It wouldn’t hurt for agents to be a little less vulnerable, though.
This particular “home buyer,” we’ll call him Clarence, hauled his group of kids and wife to see a home in Elk Grove. His agent — not me, of course — picked him up at his home because Clarence did not have a car. Clarence also did not have a computer so he could not look at homes online, but he knew what he wanted: a gorgeous home with 5 or 6 bedrooms in Elk Grove. Clarence negotiated, through a counter offer no less, to buy a home in Elk Grove for cash. Half a million.
Where was the money coming from, otherwise known in the industry as Proof of Funds? The purchase contract gives a buyer 3 days to produce it. The buyer’s agent promised the listing agent the funds were coming. Every day, same story. That was enough to make the listing agent suspicious but the buyer’s agent was still hopeful. Where are the proof of funds, the listing agent asked again and again.
Turned out Clarence’s brother had won the lottery. No joke! Not only that, but Clarence had bought two brand new cars from Elk Grove Ford and those vehicles would be delivered at the end of the week to Clarence’s present home in Elk Grove.
You might ask yourself who would believe such a story — but then you don’t know real estate agents and how gullible many real estate agents can be. There is an entire industry that sells books, tapes and seminars to real estate agents because they can be so easily snookered. Who better to sell to than another salesperson? Well, I guess one could sell to a con-artist.
To be fair, an honest person might have a hard time believing that another human being would pull such a stunt, in addition to asking what’s in it for the con artist? The buyer can’t close escrow if he doesn’t have any money. He is not getting the keys early so he can’t take possession. What’s the point? I suspect the point is to dream. Maybe drive by and tell friends that he is buying a home for half a million. Perhaps to cruelly punish the children when they don’t bring home A’s on their report cards. “I promised we’d buy that house if you got an A in Science, but you failed, so . . . “
Maybe there is no rationalization at all. Maybe the buyer is mentally ill? At some place one needs to stop hoping for the best, look at the excuses and piece the situation together. There is always Google, too. Turns out Clarence had been arrested for stealing cars. He gave a Mercedes dealer a fake check and had driven off in a Mercedes before the police nabbed him. Clarence had been arrested several times, and his alleged wife (he probably wasn’t married) has a police record, too.
Since when do Mercedes dealers take a check?
Maybe it’s not a bad idea to Google your Sacramento home buyers, check Facebook? Especially if something doesn’t seem right. Trust your instincts.
Elizabeth Weintraub Can Sell Even This Home in Sacramento
People have asked this Sacramento real estate agent why her clients are so ecstatic about her to write such fabulous and expressive reviews after escrow closes. They ask how do I generate such positive feedback when I’m so busy? I generally don’t get the usual type of reviews that just say I did a good job and the clients would recommend me, and then they could go about their normal business and forget my name. Clients instead tend to say that the Elizabeth Weintraub Team does the supernatural and performs impossible feats, and they would pretty much strew rose petals everywhere we walked if they could afford it. Why do they say these things when all we really do is close that sale for them? I bet some people think we bribe them, but my clients are not the kind of people to accept a bribe or we might have tried it.
Here is an example of a remarkable short sale that closed against all odds in Sacramento. I started to work on this in July of last year. The seller did not have a key and the home was tenant occupied. I prefer that tenants move out because some are uncooperative and, even if they initially appear cooperative, soon as they learn it’s a short sale, many stop answering the phone or the door. Even though it’s against the law, they often stop paying rent, stop letting buyers see the home and all-in-all become a general nuisance. The seller hoped for the best.
I was my charming self, though, because Elizabeth Weintraub can sell, and persuaded the tenant to let us show the home on Friday afternoons. We quickly went into contract with a cash buyer. This was a buyer with whom we had closed another short sale in Antelope. He was a real estate agent. We asked him to produce updated proof of funds because his proof of funds was dated several months ago. Banks want docs dated within 30 days. He couldn’t or wouldn’t do it. So, after issuing a Notice to Perform and he failed to perform, the seller canceled this particular buyer.
The tenants were getting a bit testy by this time, but they cooperated and we went into escrow with another buyer, short sale buyer #2. Finally, the credit union issued a verbal counter offer. These responses are rarely in writing. The credit union demanded a higher price. They dinged around with this short sale for so long that the prices had gone up. I proposed the higher price to the buyer, but the buyer balked and elected to cancel, which in my book was a pretty stupid move because what kind of home would that buyer be able to purchase now? In a seller’s market when almost every property has a handful of offers? Not for me to worry about. Thank goodness I was not his agent.
We sold the home again to a new buyer in December: buyer #3 for this short sale. After battling the credit union for months, we secured short sale approval rather quickly this time. The buyer completed the home inspection and was getting ready to close escrow. The seller gave notice to the tenants and one of them moved out. The other tenant at the 11th hour refused. He told the seller that he wasn’t moving until the sheriff threw him out. The buyer’s agent called me to say the buyer was canceling because the buyer could not move into the home.
The purchase contract stated the seller would deliver the property without a tenant in it at closing. The seller could not deliver on the promise because one of the tenants refused to vacate.
My idea was to pay the tenant to move. That’s what he was angling for, cash for keys. It was cheaper than evicting him, and much safer than dragging him out in the back alley and whomping the living daylights out of him, which is what I suspect crossed some people’s minds at that point. But the buyer instead asked to cancel the escrow.
When it rains on your parade, you parade in the rain. I’ve learned that lesson in life. We put the home back on the market, pending rescission. In the confidential agent remarks, we wrote that:
- Potential buyers could not view the home
- Potential buyers could not view the home ever
- Potential buyers must purchase the home without ever seeing the inside of the home
- Potential buyers must purchase the home with a hostile tenant living inside.
- Potential buyers must pay about $25,000 more than our original list price
- The potential buyer’s agent would receive a severely discounted commission, an amount so low that most agents would refuse to even write an offer.
We received about a half-dozen full-price offers at those terms and conditions. Believe it. Because it happened. Because the real estate market in Sacramento is so insane and wild that a buyer would purchase a home they could not see with a tenant who would not move at the top of market value. Did I mention it needed to be all cash?
The existing buyer changed his mind about canceling and closed escrow last week.
Moreover, when a buyer’s agent told me last week that his buyer, who was purchasing a stripped out and vandalized home I had listed in north Sacramento, decided to try to renegotiate the agreed-upon sales price, the answer was no, followed by hell no.
If you’ve got a home to sell in Sacramento, call Elizabeth Weintraub at 916.233.6759. I’m more than happy to do it, and I guarantee you’ll be thrilled with my performance.
It’s Just Business, Nothing Personal
I hear some agents grumble that Elizabeth Weintraub is one tough cookie, but I am actually an extremely happy-go-lucky Sacramento real estate agent. Even though every day selling short sales is a fresh new day in hell. I look forward to it. Bring it on. Hey, ask any of my clients. They’ll tell you I am cheery almost to a fault, always anxious to help or to explain something. I suspect agents equate my toughness with my non-tolerance for purchase contract violations. I practice zero tolerance for possible breaches of contract.
For example, our purchase contracts state by default that all earnest money deposits are to go into escrow within 72 hours of the sellers’ acceptance. It’s right there in paragraph 3A1 on the first page. That means we expect the deposit to be in escrow. It doesn’t matter if it’s a short sale or a regular sale for a seller with equity. You make an offer on a home, you put your money into escrow. No exceptions. After 35-some years in this business, it’s simple: you’re a buyer or you’re not.
An agent from the city of Davis objected to this a while back. He did not want his buyer to release his deposit. Or, maybe his buyer didn’t want to release. Said they don’t do that in Davis. What? They don’t close escrow in Davis? That hasn’t been my experience. In either case, that’s not an offer we considered. Because that’s not an offer. It’s just business, nothing personal.
I don’t enjoy advising sellers that we need to cancel buyers from a purchase contract. But, if a buyer does not perform, I will suggest that the seller submit a Notice to the Buyer to Perform, and follow that up with a cancellation. It makes no sense to be in escrow with an individual who is not acting like a buyer. Another buyer could not produce his updated proof of funds last week to buy a short sale. He could not produce the document because that document did not exist. He gave us all kinds of excuses and reasons and promises. It was noise. A buzzing in my ear. T’weren’t tinnitus.
This did not mean he could not close escrow, either. By the time we received short sale approval, he probably could have found the money somewhere. In his mattress. His wife’s checking account. A deal in the back alley, maybe. But we don’t operate on wouldja, couldja, didja. If you can’t show us the money, we will cancel your short sale. It’s just business, nothing personal.
