CASH OFFERS AND PROOF OF FUNDS LETTER

[Jonathan Lane]

Hello World,

I have been doing research on "cash" offers as an investor and the results I have came up with is a "cash" offer can be consider any funding that is or has the ability to be liquidated without contingency from a bank; i.e. hard money, private money or your own cash. Is this correct? However, I was speaking with my real estate agent today and they mentioned that I could not offer a "cash" offer if the cash is: 1) Coming from a third party and 2) The cash offer has to come from my approved bank account. Is this correct? That said, there has been some confusion set in and I am looking for clarity on: 1) how to go about a "cash" offer? 2) Define what a "cash" offer is?

With all of that being said, does anyone have a legal soft proof of funds letter (pre-approval) that is editable and will work in all 50 states? If not, how can I go about obtaining something like that or can I even obtain a soft proof of funds letter?

Connected to this email is a link of a soft approval letter- does this work? if not, what needs to be done for it to work? Or again, how can I can one that works in all 50 states that is approved by different brokers?

I want to thank you for your time and your guidance on this topic

Soft Proof of Funds Letter

Thanks,

Jon Lane

[Jeff Copeland]

@David Kuhlke - This is going to depend on what the contract you are using states in the Cash versus Financing section. 

Here in Florida, our most common contract states:

"Buyer will pay cash for the purchase of the Property at Closing. There is no financing contingency to Buyer's
obligation to close. If Buyer obtains a loan for any part of the Purchase Price of the Property, Buyer acknowledges
that any terms and conditions imposed by Buyer's lender(s) or by CFPB Requirements shall not affect or extend
the Buyer's obligation to close or otherwise affect any terms or conditions of this Contract."

So in this case, clearly we can check the "Cash" box, but still use hard money, a HELOC, or whatever. The key is there is no financing contingency, and if the buyer does not perform, they lose their deposit.

But, obviously, anybody can check that box and sign an offer. If you don't actually have the cash (or access to it), then you'd be tying up the seller's property for no good reason and wasting their time and money. That's why a savvy seller or realtor is going to say "show me the money" in the form of a bank statement or letter from your bank - It's literally to stop wholesalers who don't actually have the cash from trying to throw around cash offers just to get a contract they can then assign to a real buyer. 

If you have the cash, proof of funds is easy: Screenshot a bank balance or provide a recent bank statement.

If you have a legitimate hard money lender who has underwritten the deal and confirmed you have the down payment and cash to close, they should be able to provide you a letter stating exactly that.

If you have neither, then you have no business making an offer in bad faith and trying to tie up the seller's property.

Also (and this is crucial and a common rookie mistake) - Don't send a "cash" offer to the title company and then neglect to tell them about your hard money lender. Title will need to prepare/receive a mortgage, promissory note, and other documents to be signed and recorded at closing if you are using hard money. You can't drop this on them two days before closing.