Real estate

Proof of funds for commercial real estate investors

When a commercial real estate investor seeks to purchase income-producing property using any number of creative financing methods, one of the most important keys to their success is their ability to provide adequate and verifiable proof of funds POF both for the seller and the lender. Funds verification can increase investors’ credibility with the seller, as well as satisfy lenders’ requirements to know that the borrower has the necessary funds to complete their transaction.

Proof of funds

There are several acceptable ways for lenders and sellers to show the POF to close your commercial real estate transaction:

  • Bank statements or bank verification
  • Brokerage account statements or verification
  • Savings account verification

“Bank verification” This is the most acceptable and widely used method to confirm that investors can complete the proposed deal. As such the money must be deposited into a bank account and confirmed by statements or letter from the banker. This is a “hard” (vs. soft) verification method because the money is deposited into an account in the buyer’s name to serve as proof that the buyer can complete the transaction.

“Brokerage Account Verification” Similar to bank accounts, brokerage accounts indicate acceptable funds to complete a purchase transaction. Likewise, affidavits or letters from the representative of the brokerage house will satisfy the requirement to prove adequate financial strength. This is also a “hard” method.

“Escrow Account Verification” This is the only method that can be hard or soft proof of the required assets as the escrow agent simply needs to write a confirmation letter proving that the borrower has the funds available to complete the transaction. It becomes difficult when money is transferred to an escrow pending closing.


Finally, there are companies whose sole purpose is to provide evidence of the financial ability of commercial real estate investors to complete their transactions. Many offer “Proof of Funds” and Transactional Financing. POF is required at the start of the deal and Transactional Financing is for closing day only. Both of these methods are an essential part of an investor’s arsenal when using creative financing.

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