Bank Statements

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US Bank Tower, tallest building in Los Angeles

Buyers:

Sellers want to know that you as a buyer are financially capable of buying their property before they accept your offer.

The bank statements or proof of funds show the seller that you have the downpayment (for a loan) or purchase price (for all cash) and the buyer closing costs in the bank ready to go.

A bank statement is one of the parts you need to make a complete offer. A complete offer is: purchase agreement, bank statements, preapproval letter (if you are getting loan), cover letter (optional)

Submitting a complete offer demonstrates to the seller you have your ducks in a row and you are a bonafide real buyer. In a sellers market where multiple offer situations are common, an incomplete offer will not even be looked at. In slower buyers markets sometimes you can get away with writing an incomplete offer because the seller doesn’t have much going on, but in general you will have much more success getting the properties you want writing complete offers. Leave the seller with no doubts, and all they have to do is sign the contract.

Bank statements/Proof of funds can be a monthly bank statement from your checking or savings account, mutual fund or stock brokerage account, IRA etc. You will want the statements to be recent, preferably within the last 30 days but 60-90 days is ok. You can usually download or priut a bank statement online from your online account or you can go into your local banking branch and speak with a teller, they will print out a copy of your bank statement for you. You can also take a “screen shot” if are viewing the bank statement on your computer.

Make sure that the bank statement has:

-Your name

-The Statement Date

-Enough funds to close

-Account Number/ any other senstative information blacked out

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Blacking out you Account Number  will protect you from identity theft. Once you send out your bank statement you don’t have control on where it goes any longer so it is best not to share you account number or any other sensitive information on the statement with the seller. They don’t need to know your account number.

For my clients, I double check to make sure all financial information is blacked out on bank statements before I send them.

Sellers:

The purchase agreement is a buyer favored contract. As a seller you don’t have the protection of any contingencies like a buyer does and the contract makes it very difficult to keep the buyer’s earnest money deposit as liquidated damages. You may only retain the earnest money if all the buyer contingencies have been removed and the default.

It is also very hard for the seller to cancel on the buyer, because if the buyer performs everything they are suppose to according to the contract the seller cannot back out. The seller can only back out if the buyer fails to perform. You may send a “notice for buyer to perform” which gives the buyer two or three days to do what they are required to do in the contract, and if they do not comply, then you may cancel.

Falling out of escrow costs you time and money. While you are in escrow, one of the buyers for your property might buy a different property and no longer be in the market when you come back on, if you fell out. The timeline for the escrow process starts all over again with a new buyer, so any time you spent while in escrow with the deal that canceled, and however long it takes you to get back into escrow again will cost you money.

Additionally, there is a stigma associated with listings that have come “back on the market” or BOM as the real estate jargon.

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No Seller wants to B.O.M.

Buyers are always suspicious of what is wrong with the property if it has fallen out of escrow. Buyers may be more reluctant to write offers, and the offers that they write will probably be less then the offers received the first time when there was more excitement surrounding the property.

This means as a seller you have to be very careful which buyer and offer you choose to accept. One of the things you will want to do is review the buyers bank statements to confirm that they have adequate funds for down payment and closing costs. The bank statement should be within the last 30-60 days and have the buyers name on it.

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