Buying a Home With Cash? Can You Prove It?

By
Real Estate Agent with Keller Williams Realty

Yes Cash Buyers Need to Show Proof of Funds Too

Every now and then I get a call from a "prospective" buyer that wants information on one of my listings and at some point, I'll ask if they have been pre-approved by a lender.  An answer that I sometimes get with such boastfulness and authority is that "Oh I'm paying with cash."  My response is usually "That's great and will save some time.  But you'll still need to provide proof that you have the funds to pay for a property that you're interested in purchasing."

Cash Buyers Need to Pre-Qualify As Well

Although cash buyers do not have to fill out a loan application and go through the loan approval process, they still need to be pre-qualified and the way to do that is to provide proof of funds.  There are a couple of ways to do that:

  1. The cash buyer can get a letter from their bank, written on official company letterhead, stating that the prospective buyer has sufficient funds on account to cover the cost of the purchase.
  2. The cash buyer can also provide an official printout or bank statements showing that the funds are actually in the account.

That makes sense right?  Well, there's another aspect that we agents sometimes have to deal with and that is the money in the mattress claim.  Slightly overexaggerating about the mattress part, but we do hear "oh I don't keep my money in the bank" and as it turns out, they don't keep it anywhere else whereby it can be legitimately verified.

But I Still Want to See View Your Listing

Unfortunately, I won't be able to help this cash buyer out unless they can give me something more submstantial and concrete to work with other than having me over to their place and showing me the "proverbial money in the mattress" in which case I may want to take Uncle Vinny with me right Alan May?

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Will Nesbitt 01/12/2017 07:46 AM
Topic:
Home Buying

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Rainmaker
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Bunny Terry
Keller Williams Santa Fe - Santa Fe, NM
A Different Kind of Realtor in the City Different

Great post. Santa Fe has a lot of cash buyers and they tend to NOT want to prove their funding until the absolute last minute. Thanks for this timely and informative post. I'm saving this one for my cash buyers.

Jan 12, 2017 07:12 AM #1
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

We have a fair number of cash buyers and I awlays ask for proof of funds, especilly when it's offer time. As a listing agent I want to see if for any cash offer but also want to verify with the lender that they have verified funds

Jan 12, 2017 07:16 AM #2
Rainmaker
343,797
BethAnn Long
RE/MAX Inland Empire - Spokane, WA
Realtor, CRS, e-PRO, Spokane Wa Real Estate

Hello, we have a form called 22EF Evidenence of Funds. I showed properties and wrote offers in 2016 for 2 " cash " buyers that never came forth with evidence of funds. I spoke with them prior to showing, explaining this would be required with an offer... The form states that the buyer has to come up with proof of funs within  ______ days of mutual acceptance. Neither did... a big waste of time for so many, you are correct... somehow we have to educate cash buyers that people can't stop everything they are doing, take their houses off the market because someone says they are a cash buyer... they need to see this as a serious business transaction and be prepared PRIOR to looking at homes, and writing offers! Too many scams out there...Thanks for the post!

Jan 12, 2017 07:17 AM #3
Rainmaker
572,562
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

I've seen agents regularly make cash offers on hot properties, win the bid, and then switch to financing because they don't actually have the cash. It's important to verify!

Jan 12, 2017 07:59 AM #4
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

It can definitely happen Nathan.  It a risk if one is willing to take it.  That's when our best judgement is our guide as it often has to be.

Jan 12, 2017 08:35 AM #5
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

BethAnn this is serious business and when buyers and sellers approach us, we need to prepared to convey that.  We want to help buyers and sellers but what we don't want to do is waste everyone's time including the buyer and the seller who quite possibly have to make plans for 30 minutes to an hour to be out of the house while it's being shown to someone who may or may not be able to buy it.  That's bad business.

Jan 12, 2017 08:43 AM #6
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Exactly Jeff.  Basically we really just want to do our jobs.

Jan 12, 2017 08:44 AM #7
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Bunny the same holds true for buyers in need of financing (they want to hold out until the last minute).  I get that, but that's really not how I choose to work.  Historically, when I've done that, it rarely turned out well.

Jan 12, 2017 08:45 AM #8
Rainmaker
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Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Charita, I must admit, I've shown homes to those who said they were cash buyers and they turned out great but I always ask for a proof. Sellers wouldn't appreciate us showing their homes to unqualified buyers.

Jan 12, 2017 11:33 AM #9
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Hi Beth. It's just never really worked out with me so well.  If they are adamant about not providing proof of funds, I'll likely refer the to someone else.

Jan 12, 2017 11:38 AM #10
Rainmaker
1,173,247
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

This reminds me of a post somewhere where someone had actually taken a photo of cash. Indeed cash makes everything easier, but it still needs to be verified.

Jan 12, 2017 12:30 PM #11
Rainer
500,606
Noel Mayer
FAIRMOUNT REALTORS - Montclair, NJ
YOU WILL BE RIGHT AT HOME WITH NOEL

Thank you Charita,

Everyday is a learning experience.

Great Information, I will bank this and bookmark it for later

 Thank you again 

Jan 12, 2017 03:26 PM #12
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Jane that is too funny.  I think I've seen something similar.

Noel for us agents, continuous learning is a bonus.

Jan 13, 2017 06:04 AM #13
Rainmaker
986,118
Will Nesbitt
Nesbitt Realty at Condo Alexandria - Alexandria, VA
Nesbitt Realty is a family-run brokerage.

Buzz 205-527-1112 Charita CadenheadReal Estate Agent with Keller Williams Realty throughout Birmingham, AL.

Jan 13, 2017 07:35 AM #14
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Thanks for the plug Will.

Jan 13, 2017 07:43 AM #15
Rainmaker
432,861
Bob Willis
Berkshire Hathaway HomeServices California Properties - Orange, CA
Orange County & L.A. County Real Estate Agent

Good post Charita.  I have actually been thinking about this topic for the past several days, with the intention of writing a post about it.

Jan 17, 2017 05:06 PM #16
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Charita Cadenhead

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