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Perhaps, but just because you can prove that you have existing funds to buy the next home doesn't mean you will use them. You still may choose to wait until your sale and then use the proceeds to purchase. Some folks might not want to disrupt their investment portfolios to come up with the money. It's a lot cleaner -- especially tax-wise -- to use the proceeds of the sale to make the purchase.
I don't see how there is a "perhaps" that having to sell your existing home would be seen as less desirable than having the cash immediately.
I don't see how there is a "perhaps" that having to sell your existing home would be seen as less desirable than having the cash immediately.
The source of the cash is a non-issue where I live because all-cash buyers typically sign a contract saying they will purchase the home without contingencies for a mortgage or the sale of their current house. If they want to be stupid enough to come to the closing without the remaining cash, then they lose the 10% earnest money, which can be quite a chunk of change here on Long Island. Perhaps its different in your area.
All-cash buyers here would consider it an insult if a seller asked for bank records (or probably even a letter from the bank) during the bidding process, although it is common to ask for a mortgage pre-approval from buyers who need financing. The way we show our seriousness as all-cash buyers is not through bank statements, but by getting the inspection done and contract signed asap after the offer is accepted. Beyond that, the loss of the earnest money is our incentive to have the necessary funds at closing.
I can't imagine that working in any other location.
EDIT: In the thread you started about a house for sale on Long Island the listing says this:
"As Per Owner Offers Must Be Cash Only With Proof Of Funds". I guess they aren't concerned with insulting any buyers.
Thanks for bringing up that post because it explains why you're not getting it. I posted that listing because it is a joke from top to bottom, including the demand for proof of funds. If you go over to a similar thread on Long Island, you can see how it's being ridiculed. The idea that you think it is serious, well . . .
I'll say just once more that it would be stupid for anyone to make an all-cash offer without having the funds at closing, regardless of the source. Even if you bamboozled the sellers during the bidding process, you would very shortly thereafter have to sign a contract without mortgage or home sale contingencies so you would risk losing the earnest money. And there might even be an issue of fraud. Perhaps people in your area are less trusting than Long Islanders, but I doubt it.
I'll say just once more that it would be stupid for anyone to make an all-cash offer without having the funds at closing, regardless of the source. Even if you bamboozled the sellers during the bidding process, you would very shortly thereafter have to sign a contract without mortgage or home sale contingencies so you would risk losing the earnest money. And there might even be an issue of fraud. Perhaps people in your area are less trusting than Long Islanders, but I doubt it.
And I think you would be stupid to accept a cash offer without proof of funds. I think the rest of the country is less trusting.
I'll say just once more that it would be stupid for anyone to make an all-cash offer without having the funds at closing, regardless of the source. Even if you bamboozled the sellers during the bidding process, you would very shortly thereafter have to sign a contract without mortgage or home sale contingencies so you would risk losing the earnest money. And there might even be an issue of fraud. Perhaps people in your area are less trusting than Long Islanders, but I doubt it.
The buyer could still back out using the inspection contingency clause, if he didn't waive that as well, and would be entitled to his EMD.
If you are a buyer, and really want the property, why wouldn't you send proof of funds? It only makes your offer stronger.
And I think you would be stupid to accept a cash offer without proof of funds. I think the rest of the country is less trusting.
I absolutely agree. When accepting an offer, sellers in my market expect to see proof that the buyer can make good on that offer. That includes having the cash the buyer claims they have.
Proof of funds during the bidding process protects the seller about as much as the worthless "pre-approval" letters that buyers are required to have from their lenders. I can give you a letter from my brokerage firm stating that I have a certain amount of assets. Then, after making a successful bid on your home, I can lose half of those assets through stock trading. As a seller, you won't know until I tell you I don't have the money. That could be two days prior to closing.
In most circumstances (at least here on LI), the time between an accepted offer and signing of the contract is about a week to 10 days with the inspection conducted during that period. Since there is no contract yet, the buyer can back out for any reason without penalty (beyond the inspection fee) and the seller can consider other bids after that short period of time with negligible effect. After the contract is signed (without the mortgage or home sale contingencies, as I have stated before), the buyer can back out due to lack of funds and forfeit the earnest money, which could easily go into the six figures.
So, before the contract is signed, the proof of funds letter offers the seller no protection at all. After the contract signing, the only protection is not the letter, but the receipt of the earnest money and the possibility of suing the buyer for fraud, including damages. Of course, the seller would have to prove that the damages exceeded the amount of the earnest money. I think that's why we generally see the proof of funds letter as a waste of time.
...sellers in my market expect to see proof that the buyer can make good on that offer.
That includes having the cash the buyer claims they have.
I can't believe this is still being argued against.
Depending on the purchase amount involved the sophistication of that proof can and will vary.
But the more complicated the buyers holdings are the more like a contingency it becomes when
the "proof of funds" describes a need to sell anything very complicated in order to get liquid.
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