Do Estate Agents Need Proof of Funds

Moving homes is an exciting time for many, but there’s much to think about before the process even begins. When you make a property offer, your estate agents could ask for proof of funds.

Many aspiring homeowners might be unsure of what this is, and why estate agents could ask for it. To find out more about proof of funds, and why estate agents often require them, continue reading.

What Are Proof of Funds?

When buying a property, you may need to show evidence that you have enough money to purchase your new home – this is called proof of funds. It’s important to ensure you have the right amount of money needed to secure a property.

These key snippets of evidence showing sufficient funds for your transaction can help the property-buying process continue smoothly. If you refuse to show proof of funds, the overall process could be slowed down significantly.

Showing Proof of Funds to Estate Agents

Estate agents, solicitors, and mortgage lenders usually ask for proof of funds. For example, estate agents must take several steps to ensure a buyer can pay for a property.

So, yes, estate agents will likely ask for proof of funds – however, you’ll probably only need to show proof of funds after putting an offer in. Additionally, there’s a chance of being asked for the source of funds. This is when you have the funds to purchase the property, but an estate agent wants to know where the money has come from, like showing proof of a property sale, or your income.

Proof of funds vs Source of Funds

Although both seem similar, proof of funds and source of funds are different. Let’s find out how.

• Proof of funds (POF) – the purpose is to show that you have the funds to pay for your new property. This can be done by showing bank statements, or a mortgage principle, to name a few
• Source of funds (SOF) – once you’ve provided proof of funds, you may be asked where the funds have come from. For example, you might be asked to show bank statements, payslips, evidence of inheritance, funds from a recent property sale, or letters from someone who’s gifted you the funds

Examples of Proof of Funds

There are a few ways to show proof of funds. Typically, you’ll be asked to show:

• A bank statement showing your deposit amount (if you’re a mortgage buyer)
• A bank statement showing your cash amount (if you’re a cash buyer)
• A mortgage agreement in principle
• Evidence that you’re selling a property (if applicable)

Know that it’s a normal practice for estate agents to check if you have funds to secure the property and where the money has come from – there’s no need to be alarmed if you’re asked to show your funds.

When Will You Need to Show Proof of Funds?

At what time in the process of securing a home will you need to show proof of funds? You will likely be asked for proof of funds before making an offer on a property. However, in some cases, you could be asked to show proof of funds before this stage.

Typically, you’ll be asked to show proof of funds more than once throughout the property-buying process – but this is completely normal. Securing your dream property means sharing key information, such as providing proof of funds. Cooperating with estate agents and providing proof of funds when asked allows for a streamlined journey in securing your next home.

What Happens if You Don’t Show Proof of Funds?

As mentioned, refusing to show proof of funds when required may slow down the entire process of buying a home. Without proof of funds, the transaction will likely not be able to proceed. Proof of funds show that you can go ahead and purchase your property, and have the funds to do so. Without providing such key information, the whole process could be postponed.

Find an Estate Agent You Can Trust

If you’re considering buying your first home, or have decided to move properties, you’ll be pleased to know that we can help. At Liam Gretton estate agents, we consist of a team of dedicated and trusted professionals who can help you find your dream property.

If you’re based on the Wirral or surrounding areas, we have a wide range of properties available across the area. Our knowledge and experience allow us to offer the highest service to our clients.

We understand that many homeowners are uncertain about the process of purchasing a property and the type of information that often needs to be shared. Our team will talk you through everything, discussing what you might be asked for and when. So, if you’re ready to find your next home, allow us to help.

To discuss our services further, please don’t hesitate to get in touch with us today. We look forward to hearing from you!