Seller asking to see bank statements?

Ok, can anyone tell me if they've encountered this or heard of this...

DH and I have offered full asking price on a house. We gave the seller's agent our pre-qual letter (which is for a lot more than the price of the house, it's worth noting). He came back and said the sellers are "nervous" because we are only putting down 3.5% (FHA loan). I don't really see why that would affect them, but ok, fine. They didn't accept or reject, because they wanted to wait until after their open house, which was today. So, they got another offer today. The seller's agent called us and asked for a pre-approval letter (we only sent a pre-qual initially). We send it. He calls back and says now they want to see "proof of funds"... i.e. our bank statements. Now I say, wtf? Isn't that what the approval letter is for? Showing that a lender has already reviewed our finances and determined that we can get the mortgage? I have never heard of providing bank statements to anyone other than a bank/lender. Never directly to the seller. Is this normal??? I feel like they are making us jump through hoops here!!

Re: Seller asking to see bank statements?

That would effect them b/c that means you have to qualify for a larger mortgage, vs someone putting down 50% and only needing half the value of the house in a mortgage.

Honestly with the amt you are putting down, you have to realize that someone else could easily be chosen over you b/c they have a larger downpayment.

Not sure why they want to see it if you are only putting a small amt down. If you said you were putting down a large amt I could see them wanting to see it b/c they want to believe you actually have the $. People do lie, get offers accepted them change plans and all of a sudden need a larger mortgage, etc, which can easily fall through.

Re: Seller asking to see bank statements?

This just happened to us and our agent told us it was because there was another offer. We had the listing agent speak to our mortgage guy directly who was able to reassure them. It should be noted that we beat out another offer because we are putting down 30% cash and the others were putting down 10%.

Re: Seller asking to see bank statements?

I would understand it if our pre-approval amount was just barely in line with their asking price. But it is for $60k over that. So there is really nothing to worry about as far as us getting the mortgage.

If it was just a matter of them choosing between us and someone who was putting 20% down, I would completely get it. It just seems odd that they're questioning our finances when we've been approved by a reputable lender for well above the offered amount.

Re: Seller asking to see bank statements?

It's not uncommon to ask for proof of funds. Obviously, it is always needed for a cash sale (in lieu of a preapproval letter), but sellers often ask for it. For example, I recently sold a condo that was being sold by a corporate relocation company, and they asked for proof of funds to verify the buyer had the necessary down payment and closing costs.

I don't think it's unreasonable to inquire further, beyond a preapproval. I always put on my listings that the seller requires income and credit check prior to accepting an offer. If I am familiar with a particular lender/loan officer, the preapproval may suffice. But if not, then I sometimes want to do further verification to protect my seller. The seller is taking a leap of faith in going to contract with a buyer, effectively taking the home off the market on the assumption the sale will go through. If the seller finds out a couple of months down the line that the buyer cannot get a mortgage or doesn't have adequate funds to carry out the sale, the seller has lost a lot of time and undergone the stress of a sale that isn't happening. So to safeguard against that risk, buyers should expect to have to provide adequate assurance that they are in a position to buy the home.

You don't need to provide bank statements for proof of funds, if you don't feel comfortable doing that. You can have your bank prepare a letter stating what is in the accounts without providing actual statements. If you do provide statements, then of course you want to redact any sensitive information (account numbers, etc). But the bank letter would be preferable and is a common way to show proof of funds.

Also, as someone else mentioned, you may be able to just have the seller's agent contact the loan officer you are using to verify all financial qualifications. But keep in mind that all preapprovals are not created equal - some loan officers will just take a buyer's word about income without looking at all of the documentation, which can be dangerous. Some buyers think they are, but they may be relying on a gift for a down payment that doesn't come through, for example, or may be banking on money that they don't yet have (a future bonus). Not all loan officers do adequate due diligence upfront.

So while a preapproval is a prerequisite to making an offer, it's not the be-all/end-all, such that further information doesn't need to be provided. And if you refer the seller or his/her agent to your loan officer, make sure your loan officer will be responsive and has all of the info he/she needs.

The bottom line is, the seller's in the driver's seat in terms of whether or not they accept your offer --even more so in a multiple offer situation. As a buyer, you really want to provide as much information upfront as possible as quickly as possible.

It can only help you to be forthcoming, and increase your chances of getting the house. If you don't feel comfortable providing the information in the form requested (assuming they asked for bank statements), I would at least have a dialogue (or have your agent speak to the seller's agent) about why, and see if there is another way you can provide assurance to the seller of your financial ability to buy the home. (But as I said, you shouldn't have provide bank statements as proof of funds, there are other ways to do it.) If you are just objecting on principle, given that you have a preapproval, I would just let that go and try to provide the information asked, to show that you are a serious, motivated buyer who is willing to cooperate.

Seller asking to see bank statements?

If you really want the house I would provide them with proof of funding. Sellers often go with those with a higher downpayment bc it seems like more of a "sure thing", if it means setting their mind at ease in choosing you, do it

Re: Seller asking to see bank statements?

Thank you for your responses! I guess I was wrong in assuming that this was out of the ordinary. Don't get me wrong, I completely understand someone wanting to make sure that whoever they go to contract with can actually get the deal done, I was just confused about why the pre-approval wasn't enough. Thanks for clearing it up for me!

Re: Seller asking to see bank statements?

You might ask if there is a lender that the selling agent feels comfortable with that you can be pre-approved through to put their mind at ease. I have never been asked for bank statements before.

Re: Seller asking to see bank statements?

We provided everything that was asked, including bank statements. Although, I don't recall they were asked for by the seller. We joked saying the next stop was the blood bank.
Hang in there!

Seller asking to see bank statements?

our sellers were concerned if i can get a mortgage because i had a short sale last year. we put the sellers agent in touch with my mortgage broker (who already pre-approved me) and he assured her I will be approved. I don't know if I'd feel comfortable sending statements to the sellers directly.

Seller asking to see bank statements?

Our sellers wanted reassurance that we could get a mortgage since we were only putting down 5% on an FHA loan and we had them talk to our mortgage broker. They were happy with that and we moved forward with the contract. I would not send my bank statements directly to the sellers-it would make me uncomfortable.

Re: Seller asking to see bank statements?