How To Render Cash Offer Useless

Managing Real Estate Broker with Howard Hanna Rand Realty License # 49FA1074963

We have had the good fortune to receive some cash offers submitted on company listings recently. Cash is nice; no mortgage, no appraisal, no banks, and fewer headaches. Agents who submit a cash offer have every right to be enthusiastic and upbeat about it.

However, there is a peculiar trend among cash offers which perplexes me, and consumers should understand this if they are in a position to make a cash offer.

A Cash Offer without proof of funds is toothless.

On more than one occasion, I've had these offers submitted sloppily with sparse terms and no proof of funds. In one instance, the agent submitting resisted the need, saying that once we have a meeting of the minds that proof of funds would be provided. This is about as logical as offering a wood stove a log as soon as it gives off some heat.

The idea that the buyer is some CIA operative or secret celebrity is foolish. The truly affluent often buy in a corporate name. What's the big secret? Do you think the seller cares who the buyer is if they bring cash? All this nonsense about privacy does not preclude the basic protocols of business and good faith. It's just a silly annoyance.

Sellers want to see the money in the account. You can black account numbers if you wish, but the benefits a cash offer give the buyer cannot be enjoyed if you cannot furnish proof that you are in fact a true cash buyer. Once an offer is accepted in principle, I have certain responsibilities of disclosure to other perspective buyers and if a bona fide offer is scared away because of an impostor, my sellers could suffer financially. That isn't cool, and it isn't good faith. It is subterfuge.

It takes 3 minutes to photocopy a statement or print something off your online account. You black out sensitive information with a sharpy and you are ready to do business. Consumers, if they want the best chance of getting  the deal, should insist that their agent provide their proof of funds if they want the deference that cash terms often enjoy.

My sellers will not respond to offers without proof of funds. Buyers should understand this, and act accoordingly.

Comments (42)

Bruce Brockmeier
Internet Marketing Consultant to REALTORS® - Yorba Linda, CA
Coached By Crouch

It takes 3 minutes to photocopy a statement or print something off your online account. You black out sensitive information with a sharpy and you are ready to do business.

Hi Phil,

Quick question.  Is that enough proof for sellers?

May 06, 2011 09:11 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Phil,  I agree with you on this one.  I always ask for some kind of bank approval even if it is not a cash deal.  The letter saying a client is good for the amount contemplated makes a stronger offer.

May 06, 2011 09:20 AM
John Zappia
Maine Custom Realty - Portland, ME
Maine Custom Realty

I don't let my buyers tip their hand with how much cash they have at their disposal...I have the bank write-up a statement on letterhead stating the buyer has the money to cover the amount offered in the contract for the specific property...It's always worked...nobody needs to see someone's statements.

May 06, 2011 09:40 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

You're right, I never send an offer without proof of funds, nor accept one, even if it's a 3.5% FHA

May 06, 2011 09:45 AM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

J. Phillip:

It is prudent for the buyer's agent to submit proof of funds with the offer.  But CAR contract give the option of providing the proof when the offer is presented of at a later date specified in the contract.  Best policy is to submit proof when the contract is submitted.

May 06, 2011 09:50 AM
Hunter Ray
Keller Williams, New Homes, Real Estate, Carriage Homes - Bryant, AR
501-915-2838, Bryant, Arkansas, REALTOR,

All I can picture right now is Cuba Gooding, Jr. & Tom Cruise screaming into the phone with each other! SHOW Me the Money!!!! Hope all of you got a chuckle out of that one....Have a Pleasant Yet Profitable Weekend.

May 06, 2011 09:51 AM
Justin Dibbs
Fairway Independent Mortgage - Ashburn, VA
Mortgage Advisor

Fortunately, I haven't run across a cash buyer that has not wanted to show POF.  Hopefully I never will, but won't hold my breath.

May 06, 2011 09:54 AM
Michael (Mike) Robinson
Broadmoor Realty, Inc. - Long Beach, CA

Proof of funds are required on REO property, as these asset managers have learned the hard way...

May 06, 2011 10:26 AM
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

It's refreshing when an offer comes in complete with proof of funds. A sad but true fact that not enough come in that way these days.

May 06, 2011 11:15 AM
Ann Bellamy
Hard money lending for investors in NH and MA - Tyngsboro, MA
Lending to real estate investors since 2006

I understand completely what you are saying, but I don't agree that it has to be mandatory.  I've just written a post with a reference back to this one where I disagreed with you, politely of course.    I realize I am in the minority.

May 06, 2011 11:42 AM
Kasey & John Boles
Jon Gosche Real Estate, LLC - - Boise, ID
Boise & Meridian, ID Ada/Canyon/Gem/Boise Counties

I agree with #25 John Zappa - my buyers that are cash usually get a letter from their bank manager.  On the listing side of course it is best to have proof of funds, especially if there are multiple offers on the table.  However, from the buyers perspective I have had buyers who couldn't get a letter from their bank for whatever reason (liability, manager wasn't willing, etc) and they wanted to be able to open a new account and transfer the amount of proof of funds to that account but they didn't want to do it until they had an accepted offer.  So, I don't think it's always as black and white as it may seem, and as Loyd #14 said, it's really the sellers choce - we can advise and give our opinions but ultimately the seller decides, not us, whether an offer will be accepted without proof of funds prior.

May 06, 2011 01:03 PM
Mike Wong
Keller Williams Realty Southwest - Sugar Land, TX
Realtor: Commercial, Residential, Leasing, Invest

Philip Im dealing with one of these agents right now on a multi-million dollar commercial transaction. Her buyers assured her and my seller they have cash and want to purchase. I have yet to see proof of funds, but they insist on getting the lawyers together to write up a contract.

Why should my owner commit thousands in legal fees, if they cant even commit to showing us proof.

May 06, 2011 01:21 PM
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

J Philip, 

Kind of mind boggling, as they wound not expect a offer to be considered without a pre-qual for a mortgage based offer. 

I am a lot happier when the details are provided and all is filled in.  Sloppy work gives me the concern that it will be challening to work with folks. 

All the best, Michelle

PS - Cash is still king, IF you can prove you have it:-)

May 06, 2011 04:00 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Anyone can claim to have all cash...Proof is essential.  Actually - my pet Siberain is thinking of cashing out her bones and buying a you think a picture of a pile of bones would fly?  Just kidding...

May 06, 2011 04:49 PM
Mitchell J Hall
Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Good advice. In an ideal world proof of funds is necessary. it's not always possible particularly with foreign cash buyers. An accepted offer doesn't mean much here. It's not legal or binding. We continue to show the property until a contract is signed. Anything can happen until there is an executed contract. I let the lawyers deal with transfer of money, funding and escrow accounts. Since the buyer needs to have a 10% deposit when they sign $50,000 to $100,000 + (average deposit) rarely will a buyer make that kind of a deposit if they don't have the balance. Most won't walk away from that kind of money and if they do it's a nice windfall for the seller. In new construction here developers/sponsors rarely ask for proof of funds or even a mortgage pre-approval because they rather keep the deposit and sell to the next buyer.


May 07, 2011 02:17 AM
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

Just to give you a head's up.  I linked and cited this post in a post I just wrote this morning about the contradiction between your position here, and Chis Ann Cleland's position expressed here.

I like to stir things up and I hope you don't mind.


May 07, 2011 02:57 AM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I have sometimes noticed a type of arrogance that accompanies a cash offer too...People who use cash as a tool correctly know that they have to prove their case going into a deal to be considered a serious player....Lack of credible player conduct says a lot about whether we are going to fly or die early on...I had had several calls from Mr. "Cash" and after being evasive and acting out their irritation, I simply say...Before we contract, I need to know if you can perform. You know you can perform, but my sellers don't know and I don't know...can you help us out here please? Thank you for this relevant and timely post J Philip...

May 07, 2011 03:23 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Proof of funds, pre-approvals . . . speak volumes on the offer made.  The sellers know the buyers "have the money" to proceed to close, and aren't questioning this, very fundamental, aspect of a home purchase:  Do you have the funds to close?!?

May 07, 2011 05:03 AM
C. Lloyd McKenzie
Living Albuquerque - Albuquerque, NM
Living Albuquerque

J. Phillip,

Great post.  I just submitted a  cash offer on a property and got turned down.  Cash is not always king.

May 10, 2011 01:42 PM
Angelia Garcia
Pure Realtors - Dallas, TX

Now that's funny----"This is about as logical as offering a wood stove a log as soon as it gives off some heat."

May 13, 2011 04:35 PM