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As a cash buyer, we often have funds in various bank accounts / stock markets, business accounts, etc. It is just too cumbersome to show proof of funds when your offer has not been accepted. In a tight and competitive market, I can understand where it makes sense to show proof of funds along with the offer. We could loose out to another cash buyer who shows proof of funds.
There are also other situations where an investor group is buying the property and while you have commitments from investors, its often too cumbersome to get proof of funds from many people - unless a deal is in place.
I think sellers should accept a cash offer contingent upon proof of funds (within 2 days to a week) or ask for a huge non-refundable deposit to show seriousness - say upto 20% on acceptance of offer.
What irks me is that pre-qualification letters are often not worth the paper it is written on - but that is somehow universally acceptable. The loan buying scenario has far more pitfalls and sellers can loose a lot more time going down that route.
In one of the posts mentioned previously, if the property has been sitting for three years - I would probably not provide proof of funds with my offer. Besides, offering 40 cents on the dollar has a high rejection chance - so why bother with proof of funds.
I think asking cash buyers for proof of funds is just like asking a seller to complete a through independent inspection of the house before selling it. There are contingencies / risks on both sides.
In Pennsylvania: I was recently told that an offer cannot be submitted to a seller's agent without documented proof of necessary funds attached to the offer? Is this actually the law now?
I can understand a buyer wanting proof within a few days of an offer that has been accepted etc, but it could be a lot of hoops to jump through to provide that just for an offer. So does ANY type of offer have to have proof of mortgage approval or funds at the time of an initial offer, nowadays?
Thank you in advance for any response to these academic questions.
No, you do not have proof of funds or preapproval to submit an offer.
But, you do to have your submission taken seriously.
Or, to go to contract.
In a buyers' market, you may be able to skim over, but in a sellers' market, with multiple offers, your submission will be in last place.
So, since all offers must be presented to the sellers, smart buyers know that "submit" does not equal "credibility."
In Pennsylvania: I was recently told that an offer cannot be submitted to a seller's agent without documented proof of necessary funds attached to the offer? Is this actually the law now?
I can understand a buyer wanting proof within a few days of an offer that has been accepted etc, but it could be a lot of hoops to jump through to provide that just for an offer. So does ANY type of offer have to have proof of mortgage approval or funds at the time of an initial offer, nowadays?
Thank you in advance for any response to these academic questions.
I would ask if I can submit the offer and proof will be supplied once the offer is accepted and if it's not then the deal is off.
As a seller, I want to know where your money is coming from. Maybe I'd accept the offer but you would have 48 hours to present proof of funds.
I've seen too many "all cash offers" where what the buyer really means is that they must sell their house first and then they will have money to buy mine. Sorry, I am not interested in a sale that is contingent on someone else selling their house before they can buy mine, and I am not interested in accepting an offer where the buyer tries to deceive me about that.
The July 2017 updated version of the NCAR Standard Offer to Purchase and Contract includes a highlighted box strongly recommending that the Seller procure proof of funds in a cash transaction prior to signing any Offer.
It only makes sense, and speaks to lack of explanation of the forms by agents that this would need to be highlighted.
Of course, in dual agency no coaching is allowed, and in the case of seller sub-agency or unrepresented buyers, the agent is not responsible for explanation.
Last edited by MikeJaquish; 07-05-2017 at 03:08 AM..
I guarantee that if I was selling a home that I would never accept a cash offer without a proof of funds letter. I don't think it would be unreasonable to expect it before accepting any offer. In addition, if I was representing a client I wouldn't refuse to present an offer without one but I would recommend that they decline such an offer until presented one.
Proof of Funds Letters from Financial Institutions
This is the most recent thread including "Proof of Funds" in title, so I'm bringing it to the forefront again.
I would have no problem submitting a proof of funds letter with an offer; however, I don't want to expose the actual amount of money I have available to a seller. They shouldn't know that I could buy their house at a significantly higher price than I am offering because of the amount of funds I have on deposit. The sample "Proof of Funds" letters that I found on the Internet do just that. See the following:
Am I misunderstanding the sample "Proof of Funds" letters, above? They appear to disclose how much money the account holder actually holds in the financial institution. (and nuts to that)
Is a separate POF letter written for each house buying scenario?
For example, suppose a buyer is interested in two different properties, and wants to be prepared to submit offers on either or both of them.
Property A has a list price of $800,000.
Property B has a list price of $1,200,000.
Should the prospective buyer obtain one letter that confirms there is $800,000 (and maybe a cushion?) and another letter that confirms that the buyer has $1,200,000+?
Are there "Proof of Funds" letters written that do not disclose the amount of funds a buyer actually has in a financial institution?
I would like to keep as much privacy as possible for myself.
If you have some other sample POF letters, please upload them or link to them. Thank you.
You can and should have current, custom letters written for each offer that matches the dollars needed. You do NOT need to disclose the total amount you have.
I have seen letters written specific to an offer with no amount listed at all that says it has been verified that ______ has the necessary funds sufficient to complete purchase of XYZ Property.
You can and should have current, custom letters written for each offer that matches the dollars needed. You do NOT need to disclose the total amount you have.
I have seen letters written specific to an offer with no amount listed at all that says it has been verified that ______ has the necessary funds sufficient to complete purchase of XYZ Property.
Thank you, Diana. I was wondering whether it would be possible to have a letter written exactly as you suggested with the XYZ Property. I like that option.
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Proof of Funds Letters from Financial Institutions
