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Old 08-12-2013, 10:30 AM
 
5,048 posts, read 6,207,079 times
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Quote:
Originally Posted by staywarm2 View Post
Proof of Funds

So I obtain a letter from the bank stating that I have enough cash to purchase the home. Is this letter submitted with the initial offer? If so, does the bank letter state the amount of the offer listed in the letter? What if negotiations after that initial offer raise the price, do I get another letter?

I don't want to tip my hand and tell the seller exactly how much money I have in the bank, since it will be more than the amount of the original offer.
The contracts I know of state if all cash proof of funds needed.

You only need to provide bank's letter that you have the amount needed to purchase. That would include purchase price and any fees needed for your inspections, title search, fees needed in your area to cover your closing costs. That can mean the bank's letter stating you have the purchase price. And something separate, like employment verification to prove you can handle the rest.
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Old 08-12-2013, 12:48 PM
 
428 posts, read 547,662 times
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Quote:
Originally Posted by cully View Post
The buyer should bring the same "proof" of financing as anyone would. He should have a home inspection as anyone would. He should have any test in your area such as radon or termite. He should have the title search. He can have an appraisal even although he will not have a lender that requires it.

At contract he should have verification of funds. Mr. Rational asked what that would be. Letter from a bank...I like local so that I can check with people I know.

At the same time an all cash buyer is not really riskier because his funding seems more etherial than a hard copy lender's office with a three dimensional lender. Remember that even a buyer getting a loan can arrange to not be able to buy. Someone who is buying with lender financing could arrange to get fired from a job, buy a car on credit, or, for any reason, could disapprove of the home inspection.
About the "verification of funds" issue: I plan to buy my next house with cash (before I sell my current house). I'd do that by borrowing against my home equity line, + taking margin loans against 1 or 2 of my brokerage accounts. Would I need to actually take out the margin loans in advance, or would just showing that I had plenty of (Liquid) assets to sell, or borrow against, be OK?

I have noticed that the couple of realtors I've told (in Mass.) that I planned to pay cash seemed almost suspicious. How many 60-ish y.o. people with perfect credit, no debt, a paid-for house, & (reasonably) substantial assets would lie about that? Then again, a lot of R.E. agents around here seem to assume that all potential buyers are clueless idiots.

And yeah, I know you have to have "proof" of everything, but it seems like R.E. agents (at least in Mass.) go out of their way to make things more difficult.....
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Old 08-12-2013, 01:06 PM
 
1,006 posts, read 1,746,023 times
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Quote:
Originally Posted by MrRational View Post
As did I.

Whether we're talking about a 2BR cottage in the country for $50,000 ...
or a 4BR/3BA upper level condo in a golfing community at $500,000...
at some point the buyer will need to do more than merely imply or assert an ability
to purchase at that level... and it will need to happen before the seller will sign the offer.

Not really. This may happen, but my last two purchases have been all cash and I never showed anything to verify funds. All depends on the experience of the sellers agent, the sophistication of the buyer and the buyers willingness to make a deal. If I say I have all cash and then can't fund, I run the risk of default and losing my EM.
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Old 08-12-2013, 03:08 PM
 
6,341 posts, read 7,107,958 times
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Quote:
Originally Posted by WoodyWW View Post
About the "verification of funds" issue: I plan to buy my next house with cash (before I sell my current house). I'd do that by borrowing against my home equity line, + taking margin loans against 1 or 2 of my brokerage accounts. Would I need to actually take out the margin loans in advance, or would just showing that I had plenty of (Liquid) assets to sell, or borrow against, be OK?
No, you should not need to take out a margin loan prior to just before closing (allowing ample time for a wire transfer to clear). I did the exact same thing on my last purchase without a problem. They may want to see verification of liquid assets, though...and you do not need to tell them that you plan to take out a margin loan. It's none of their business as long as you can pay for the purchase. Just don't stretch yourself too much on the loans.
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Old 08-12-2013, 04:47 PM
 
5,048 posts, read 6,207,079 times
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Quote:
Originally Posted by WoodyWW View Post
About the "verification of funds" issue: I plan to buy my next house with cash (before I sell my current house). I'd do that by borrowing against my home equity line, + taking margin loans against 1 or 2 of my brokerage accounts. Would I need to actually take out the margin loans in advance, or would just showing that I had plenty of (Liquid) assets to sell, or borrow against, be OK?

I have noticed that the couple of realtors I've told (in Mass.) that I planned to pay cash seemed almost suspicious. How many 60-ish y.o. people with perfect credit, no debt, a paid-for house, & (reasonably) substantial assets would lie about that? Then again, a lot of R.E. agents around here seem to assume that all potential buyers are clueless idiots.

And yeah, I know you have to have "proof" of everything, but it seems like R.E. agents (at least in Mass.) go out of their way to make things more difficult.....
If you're of a certain age you could also explore a senior loan. Seems to work well when there's a lot of equity. There's no payments any more. But there's more closing costs on a senior loan than on an equity loan. But there's no more payments. All owners need to be at least 62. How much money you get out depends on your age. And if one is 62 and on 67...it's based on the lower age. Bu there's no more payments. There are a few ins and outs.

So if your of age and think it'll take a whle to sell your home or maybe would like to keep your current home as well....something to consider. The home with the senior loan needs to be owner occupied and not a regular rental.
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Old 08-12-2013, 10:11 PM
 
Location: las vegas
8 posts, read 9,734 times
Reputation: 15
I feel its in my best interest to allow listing agent to earn double fees by repping me as a buyers agent. Why? My info flow tends to improve and in a tight competitive situation, double agent can cut back fees to help my bid win. As a buyer even if I have an independent buyers agent they have moral hazzard to let me over pay since they are earning a % of price.

In the end, you have to represent your interests.
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Old 08-13-2013, 09:42 AM
 
Location: Bvi/Acores
111 posts, read 186,623 times
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Quote:
Originally Posted by Frihed89 View Post
Cash buyers attract money-laundering sellers.
Sometimes that is true. Where I've lived in the past it was common practice to show up with a suitcase. Property was often sold for 20% more than it was listed it for - no one at the bank so much as blinked.
Nowadays with stricter monetary controls - it doesn't happen as often. Private sellers/buyers don't have to follow the rules of agencies and brokers.
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Old 08-13-2013, 09:52 AM
 
Location: Ocala, FL
3,081 posts, read 5,621,167 times
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Quote:
Originally Posted by pickyeater View Post
I feel its in my best interest to allow listing agent to earn double fees by repping me as a buyers agent.
I am not certain how you think a listing agent is earning a double fee.

All commissions are negotiated between the listing agent and the seller when the home is listed. You have no say in that negotiation and you are not directly paying an agent in the transaction. The commission is paid from the seller's proceeds.
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Old 08-17-2013, 10:00 AM
 
396 posts, read 1,380,649 times
Reputation: 296
Quote:
Originally Posted by staywarm2 View Post
Proof of Funds

So I obtain a letter from the bank stating that I have enough cash to purchase the home. Is this letter submitted with the initial offer? If so, does the bank letter state the amount of the offer listed in the letter? What if negotiations after that initial offer raise the price, do I get another letter?

I don't want to tip my hand and tell the seller exactly how much money I have in the bank, since it will be more than the amount of the original offer.
I wouldn't submit proof of funds with an initial offer for the reason you list. I wouldn't even let the buyer's agent know that specific financial information yet.

The written offer to the seller can highlight that your purchase is all cash. Then, if the offer is accepted, the buyer has a specific time period to produce proof of funds to the selling agent. Also, the selling agent needs to be satisfied of the type of document used for proof. Otherwise, the contract may give the seller the right to back out if proof of funds is not met to their standards. Some sellers may simply accept a copy of your bank statement (remove confidential information - your account number, address, etc). Others may get more picky with what they want.
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Old 08-17-2013, 02:26 PM
 
2,207 posts, read 4,249,135 times
Reputation: 3589
Isn't one of the biggest benefits of paying cash for a house the fact that if the price is $150k, then that is what you are paying rather than paying back a loan with interest that can significantly increase the price of the home if you take 30 years to pay?
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