Advice for Cash Buyers

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

DoughIf you are paying Cash for real estate, especially here in in a high cost area like Westchester, I have some advice as a broker who has worked with many cash buyers. First, congratulations on havng the recources to pay cash. You are blessed.

Here are a few steps that will help you in your efforts.

  1. Get a statement for the account with the funds. It can be printed up from your online account, gotten from your bank branch or financial institution, or one of the statements they mail out periodically. 
  2. Get a sharpie or magic marker. 
  3. Take the sharpie or magic marker and black out your account number. Photocopy the document. 
  4. Give the copied document to your agent so they submit it with your offer. 
  5. If steps 1-4 won't suffice for some unfathomable reason, a letter from your personal banker, CPA or attorney stating that you have the funds in liquid form will do. This is frankly, more work, but it will suffice. 
Failure to provide this proof with your offer makes you look like a gnu, and will out you as an amateur, as a true professional has proof of funds at the ready. Starting a deal out with undermined credibility is not an auspicious beginning. 
Here is what will not substitute for steps 1-4:
  • Impending lawsuit settlement, inheritance, or lottery winnings. 
  • A pre approval for a line of credit on another property. 
  • A letter in Microsoft Word from a hard money lender 200 miles away that you are "good for it."
  • Vehement verbal assurances from your agent that you have the money, followed by how long the agent has been in the business.
  • The promise of proof once we have a deal. No can do. Stoves never heat up without wood. Chop chop. 
  • Acting insulted we had the temerity to ask for such proof. 
  • Informing us that your broker is now in Tahiti, the fund manager needs their retina scan, and that we'll have something in writing on the first Friday of next month. Sorry Charlie.
Here's the thing: We aren't being nosy voyeurs who want to go through your financial medicine cabinet. We simply want to assure our seller client that you are a qualified buyer. Playing footsie with an uncredentialed cash buyer for weeks while we wait on contracts and inspections can cost us a real buyer, as we have obligations of disclosure that can scare other prospects away in the interim. This can cause a loss of time and significant money. In areas like Westchester and New York, real estate setbacks are crazy expensive. 
No seller can seriously evaluate an offer without proof that the buyer can perform. Money talks. Hot air walks. But it's more than that. It isn't personal. It is business. It is protocol. It is how we play in the sandbox. It is fundamental. It is not a favor or peering into your personal, confidential life. When you go to sell your property, you'll want a colonoscopy on your prospective buyer, and I won't blame you. But I'll assure you that steps 1-4 will be more than enough. 


Comments (75)

Valerie M. Blake
RLAH Real Estate - Washington, DC
Distinctive Marketing - Exceptional Service

And for the "cash" investors out there: Don't show me your account full of cash and be late to settlement because your hard money lender has put conditions on the loan you didn't tell me or my seller about.  I don't care where you get your rehab money after the deal is done.  The sale is either cash or it's not!

Jul 20, 2011 05:33 AM
Jeremy Joslin
Coldwell Banker Residential Brokerage - South Windsor, CT
Professional Real Estate Marketing and Sales

Great.  You mean you won't just take my word that I'm good for it.

Jul 20, 2011 06:21 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

VEry sound advise.  I think they also need to understand that paying cash does not mean you can low ball everything in site.  I ask them if they were selling would they take 20% of the price to sell for cash quick vs waiting 45 days for full price?

Jul 20, 2011 06:35 AM
Bruce Fecteau
Century21 Beachside MV - Mission Viejo, CA

Good Post

I agree completely with your approach.

I'd also have to say that as an agent when you're asking the "cash buyer" to produce this that you'll find out quick whether you've got a real client or not.

Best of luck this year.

Jul 20, 2011 06:36 AM
Ann Bellamy
Hard money lending for investors in NH and MA - Tyngsboro, MA
Lending to real estate investors since 2006

Love the "Dough"

We've had the discussion about cash offers before.  If I were in your shoes, I'd want the POF too.  But since I'm usually working working with the guy who has asked me for that POF letter...well, I'm never 200 miles away.  :-)  And I never say someone is "good for it".  If they were, they wouldn't be using hard money.

Jul 20, 2011 07:12 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Really, it's protocol. You either have the money available now & just prove it. If not, you don't have that 'cash' you've been touting.

Jul 20, 2011 07:45 AM
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

Stoves never heat up without wood. Chop chop. LOL, I've never heard that one before. This is another point to make with FSBO sellers ... "Are you sure you are willing to ask a potential buyer for their financials?".

Jul 20, 2011 07:54 AM
Paddy Deighan MBA JD PhD - Vail, CO
Paddy Deighan J.D. Ph.D

loved your blog post....I have had Wells and BofA both question POF with the account number blocked out (or as we attorneys like to say "redacted"- but then again we call lies "misrepresentations" LOL   My response to both ,enders was, I will unblock teh acoount number if you send a me a written indemnification from you. Predicatably, they backed off

Jul 20, 2011 07:57 AM
Marsha Cash
RE/MAX Advantage - Stockbridge, GA

Guess I'm slow.  Kept looking at the picture and couldn't figure it out, but suddenly it hit me! 

Jul 20, 2011 08:10 AM
Marion Goodman

Love your post. In the last downturn I had a buyer from China who said he had all cash. I said show me your bankstatement. He said he had it in his safe deposit box. I said, show me the money. We went to the safe deposit box and I took a polaroid picture of the stacks of money. The listing agent accepted it, escrow closed and I have a great story to tell to new agents :-)

Jul 20, 2011 11:03 AM
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Condo and Home Specialists

Sure, you can't blame a seller for making sure these buyers are financially sound. In some pricey neighborhoods here on the North Shore of Long Island, sellers are also asking to see financials even before showings!

Jul 20, 2011 11:18 AM
Ken Anderson
Apex Results Realty Inc., Brokerage - Burlington, ON
Broker in Burlington, Ontario

This isn't common practice where I work, unless of course, there is some reason to be suspicious.  The buyer's agent usually gets ID and source of funds from the buyer (not necessarily verified) but it is unusual for the seller's agent to ask for proof of ability to buy, either in cash or conditional upon financing, beyond asking the buyer's agent if they were satisfied that the buyer is bona fide.  Normally, the buyer's agent will say whether he has any qualms about his buyer or not.  Usually not, but if he did, it then would be countered with a clause asking the buyer to submit proof of funds (if a cash purchase) or proof of down payment (if contingent on financing) within 24 hours of acceptance of an offer.  Or whatever arrangement the 2 agents can agree on that will satisfy the seller.  I have never asked anyone for a printout of their bank statement, as that would contravene the privacy act and my agency confidenciality with my client (unless he agrees in writing).  It is easy to get a bank officer to send an email, or have a letter for pickup nearby in most cases.  It appears that this is more important in other areas though from the tone of the comments.  Interesting.  Thanks, J.

Jul 20, 2011 11:40 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Interesting how many people think you should just take them at their word - and don't want to reveal any personal financial details.

Jul 20, 2011 02:36 PM
Stephanie Leon | Miami Lakes Realtor®
Realty Empire Incorporated - Miami Lakes, FL
Turning For Sale Into SOLD!

Good advice.. Let's hope some cash buyers will read it and catch on.. I work with a REO seller that if the proof of funds is not with the offer they don't even want me to send it to them... The part that sucks is then when you have to go back and request the proof of funds from the buyer's agent it is like pulling teeth... In the mean time the agents who have prepared their buyers and submit the offer with proof of funds snatch the property up. While we are still waiting for the other agent to send in the proof of funds...

In this market the first offer in does not matter.. What matter is a complete offer with proof of funds for cash buyers and a D/U for finance...

Jul 20, 2011 02:47 PM
Karen Steed
Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton - Tallapoosa, GA
Associate Broker Haralson Realty

My four favorite words in the english language are "all cash at closing".  My investors know they must provide proof of funds.  I know they have money but the seller needs proof.

Jul 20, 2011 05:05 PM
Gerard Gilbers
Higher Authority Markeing - Asheboro, NC
Your Marketing Master

Great points. We are in the business of real estate transactions and there are certain rules of the game. We are merely letting them know what the rules are, preferably sooner than later to head off any surprises!

Jul 20, 2011 05:35 PM
Sarasota & Manatee Counties FL
SaraMana Properties - - Bradenton, FL - Listings In Paradise

An interesting blog post that I enjoyed reading! Thank you for sharing it!

Jul 21, 2011 04:53 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Great post, and since I didn't know what the graphic was I scrolled over and read:  dough 


Jul 21, 2011 06:48 AM
Thomas Haught
The Russell Realty Group - Saugus, MA

Thomas Haught

Great advice!  Most people balk when someone says they are a cash buyer, so the only way to get them to believe is by proof of funds.

Jul 27, 2011 03:59 PM
Michael Dagner
Brokers Guild Classic - Denver, CO
Your Denver Homes Realty Expert

Hi JP, thought I'd dust this one off for a reblog.  Always good advice especially in our heated-up market.  You always have such a way with words. Thanks,

May 08, 2014 03:06 PM