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You might consider a letter to YOUR agent saying you have funds to cover a purchase of $xxx,xxx. He or SHE must NOT disclose this number except to say that She has been assured that you have liquid funds to cover the contemplated purchase.
That way you don't disclose to a seller what you total financial picture looks like and disadvantage yourself when it comes to negotiating a purchase price.
Once you have a deal, put a contingency in the papers (well, actually the seller should demand it; not you) saying you have liquid funds to cover the agreed purchase price.
You cover yourself this way without disclosing your complete buying power, which I would NEVER disclose to the seller or their agent.
OP, don't make this complicated. You make your offer and your offer will say that proof of funds will be provided within 48 hours of acceptance of the offer (or 72 hours if it is a weekend).
Then you have your bank write you a letter that says that you have sufficient funds on deposit with them to "cover the purchase price" of the property located at *address*. The bank doesn't have to give a dollar amount. Simply "sufficient to cover the purchase price".
Banks do it all the time. It's nothing new to your banker.
By the way, I buy often for all cash and I've never had anyone ask me for proof of funds. They might ask where the money is coming from, especially since too many people think they can offer all cash and neglect to say that the money is from the sale of their current house that hasn't sold yet.
I don't know why it matters that much. I mean, the realtors have already searched you and ensured that you have the funds... otherwise they wouldn't be wasting their time with you. So, in a way, everybody kind of already knows what you can do.
Just make your offer. It really doesn't matter how much you have or don't have. Of course, if you have cash, you can use that as a bargaining tool, meaning, you can tell the seller's realtor (if they have one) that you can make a quick cash offer and can offer a lower price, because cash offers mean the transaction will happen quickly. With cash you can negotiate, because the business gets done quicker. You can be in and done with it within a week. Otherwise, if you take out a loan it takes much longer, and so a seller has to wait more.
Is this a common thing?
We recently bought a house in Arkansas while still living in Texas, and we paid cash.
We didn't offer nor were we asked to provide proof of funds or any financial information. When our agent wrote up the offer, he merely specified on the form that it was a cash offer with no contingencies (which we successfully used as a bargaining tool to negotiate the final price).
At no time when the house was in escrow did anyone ask us for proof of funds. We took a cashiers' check for the final amount ($285k) to the closing, and that was that.
I don't know why it matters that much. I mean, the realtors have already searched you and ensured that you have the funds... otherwise they wouldn't be wasting their time with you. So, in a way, everybody kind of already knows what you can do.
Just make your offer. It really doesn't matter how much you have or don't have. Of course, if you have cash, you can use that as a bargaining tool, meaning, you can tell the seller's realtor (if they have one) that you can make a quick cash offer and can offer a lower price, because cash offers mean the transaction will happen quickly. With cash you can negotiate, because the business gets done quicker. You can be in and done with it within a week. Otherwise, if you take out a loan it takes much longer, and so a seller has to wait more.
Explain that part about the agents already searching you.
I don't know why it matters that much. I mean, the realtors have already searched you and ensured that you have the funds... otherwise they wouldn't be wasting their time with you. So, in a way, everybody kind of already knows what you can do.
Just make your offer. It really doesn't matter how much you have or don't have. Of course, if you have cash, you can use that as a bargaining tool, meaning, you can tell the seller's realtor (if they have one) that you can make a quick cash offer and can offer a lower price, because cash offers mean the transaction will happen quickly. With cash you can negotiate, because the business gets done quicker. You can be in and done with it within a week. Otherwise, if you take out a loan it takes much longer, and so a seller has to wait more.
Fwiw, a "cash deal" doesn't carry any weight with a seller if the buyer expects a massive discount in a strong market. I recently listed my parent's place for sale and they rejected both cash & conventional offers that were too low given market conditions - I.E., if I can get full price by waiting an extra couple weeks to close, why not wait? Both of the rejected buyers were hyped-up by their agents as being "golden buyers", but the accepted FHA offer was higher, the house was in good shape & there wasn't any reason to fear an FHA appraisal. The home appraised easily with no conditions & total wait time from offer to close was 3 weeks. So FHA doesn't necessarily mean a long wait for a seller & "cash" isn't necessarily king. Sellers always get "cash" at close anyway, unless the deal is negotiated in chickens or krugerrands.
Explain that part about the agents already searching you.
Any agent worth their salt will absolutely insist that you talk to a banker before they start showing you homes. They don't have any ability to "search" you to determine your credit, that's why they'll insist that you meet with a banker & show your cards to the banker - the banker can then issue an pre-qual letter or vouch for you.
We are presently prepping our present house for sale (already have a realtor lined up; she helped us find our present home), and have traveled several times to another state where we already decided we want to move. In the past few trips we've traveled pretty much the length of the state (thankfully it's small), and have narrowed our sights to 2 separate areas. We have a rather 'tight' wishlist of what we want in our next/last home (land, age/style of house, definite no-nos of condos, lack of elbow room with regards to neighbors, etc) which the realtor told us makes his job much easier.
We are planning a vacation/house-hunting trip in the next few weeks, and have already interviewed 3 and decided on one realtor who is experienced with long-distance relocations. Our next purchase will not be contingent on the sale of our present home since we plan to purchase our next home as a cash sale. We have funds already liquid in 2 separate accounts.
Part of me is very uncomfortable providing a Proof of Funds letter from our bank which shows the amount of funds since we already have a small list of homes we would like to see (if they are still available) that range from the low 200K to close to 450K. Since this will be the possibly ONLY time we buy without needing a mortgage, and want to negotiate a little depending on what an appraisal shows (we wouldn't low-ball an otherwise fair price), can we have our bank provide a Proof of Funds letter that shows a different amount than what is in the bank (as in what we would offer, plus a bit extra)? It will still be an amount which is already in the bank, liquid, but not the total amount.
This is all new to me/us, so hopefully my question won't offend anyone.
A proof of funds letter won't include the amount you have in the bank, only that you can afford x amount of money where x is amount you state. Only provide it if asked, they don't always ask and instead rely on a deposit of 10% or more. We had such a letter and never got asked for it.
As always, a ton of great suggestions and advice. My concerns are because this is going to be a really distant (as in across the country) purchase and because, well, we always had to deal with issues like mortgages and downpayments. Doing our initial research, we read that proof of funds is common for all-cash sales, though now I'm thinking that it's probably outdated information.
I actually do think proofs of funds availability, at least as much as I laid out above... is fairly necessary for offers to be considered serious. I would expect it, and if it's not a problem, offer it before a seller has to ask.
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