Somebody has offered you cash for your house. The number sounds reasonable and they seem professional. Before you take the property off the market for anybody, there is one document to ask for, and how they respond to the request tells you as much as the document does.
This article covers what proof of funds is, what a real one looks like, how to verify it, what to ask for in a financed sale instead, and the responses that should end the conversation.
We buy houses for cash, so we are asking you to apply this to us as well as to everybody else. That is the point. We are not attorneys and a real estate attorney or your title company can advise on your specific contract.
Why this matters more than the number
An offer is worth nothing if the buyer cannot complete. And the moment you accept, you take the property off the market, stop taking viewings, and start planning around a date.
If that buyer disappears in week three, you have lost the weeks, gained days on market that later buyers can see, and if you had a deadline, a foreclosure sale date, a job start, a court date, you may have lost something you cannot recover.
The cost of a buyer who cannot complete is never the price. It is the time, and time is the thing sellers with a deadline cannot get back.
This is the practical defence against the contract assignment problem covered in our article on what wholesaling means for a seller. A wholesaler who intends to find somebody else to close frequently cannot produce proof of their own funds, because they do not have them.
What proof of funds actually is
Documentation showing the buyer has liquid funds available to complete the purchase. In practice one of the following:
- A bank statement showing the account holder's name and an available balance sufficient for the purchase, recently dated
- A bank letter on the institution's letterhead confirming funds on deposit, signed by somebody with a name and a contact number
- A line of credit letter, where a buyer is using a facility rather than cash on deposit. This is legitimate and worth understanding, because a facility can be withdrawn
- A statement from a brokerage or investment account, though liquidity matters and not everything in such an account is available tomorrow
What it is not
- A screenshot of a phone banking app. Trivially faked and increasingly common
- A letter from the buyer themselves asserting they have money
- A "verification of funds" from a company nobody has heard of that turns out to be affiliated with the buyer
- A pre-approval letter. That is financing, which is a different thing entirely and covered below
- A promise to provide it later, after you sign
How to actually verify it
Most sellers ask for the document, glance at it and file it. A few minutes more is worth it.
- Check the name matches. The name on the funds should match the name on the contract. A statement in a different individual's or entity's name is a question, not necessarily a problem, and ask it.
- Check the date. A statement from eight months ago tells you about eight months ago. Ask for something within the last thirty days.
- Check the amount covers the purchase, not merely a deposit.
- Call the bank using a number you look up independently rather than the one printed on the letter. Ask whether the letter is genuine. Banks will generally confirm or decline to confirm, and either response is informative.
- Ask about redactions. Account numbers being partially hidden is normal and sensible. The name, the institution, the date and the balance should not be.
- Ask where the money is going to sit. A serious buyer expects earnest money to be deposited with the title company rather than held by them.
If the buyer is using a mortgage
Proof of funds is the wrong document. What you want instead:
A pre-approval, not a pre-qualification
These sound similar and are not. A pre-qualification is typically based on information the borrower stated, without verification. A pre-approval generally involves the lender checking income, assets and credit.
Ask which one it is. A letter that says pre-qualified is considerably weaker than one that says pre-approved, and a seller who does not know the difference is relying on the wrong thing.
What to ask a financed buyer
- Which lender, and is there a named loan officer with a phone number?
- Pre-qualified or pre-approved, and what was verified?
- What loan type? Conventional, FHA, VA and USDA loans have different property requirements, which matters on an older house
- What is the down payment, and is proof of those funds available?
- Is the buyer's own house sale a condition?
- Are they also providing proof of funds for the deposit and closing costs?
That third point matters more than sellers realise on older Oklahoma housing. Some loan programmes have property condition requirements that a house with a tired roof or peeling paint will not meet, which is covered in our article on what a home inspector checks.
Earnest money tells you as much
A deposit shows a buyer has something at risk. Somebody with almost nothing at stake walks away far more easily than somebody who stands to lose a meaningful sum.
Two things to insist on:
- It goes to the title company or closing attorney, not to the buyer or their agent
- It is deposited promptly, within the timeframe the contract specifies. A buyer slow to deposit is telling you something
Very small earnest money on a cash purchase, combined with a long inspection period, is one of the clearest signals of a buyer who intends to find somebody else to close.
The responses that should end it
- Refusal to provide anything. There is no legitimate reason. Every serious buyer expects the request
- Offence at being asked. A professional buyer is asked this constantly and is not offended by it
- "We will provide it after you sign." That is backwards and it removes your only leverage
- A screenshot, or a document with no institution name, no date and no contact
- An unusually long inspection or due diligence period on a cash offer, which is time to find a buyer rather than time to inspect
- Pressure to decide immediately, combined with any of the above
The pattern matters more than any single item. One of these might be nothing. Three of them together is a picture.
Two other checks worth ten minutes
Ask the title company
The most reliable check available to a seller and almost nobody uses it. Title companies see every operator in a local market and they know who closes what they contract and who does not.
Ring a local title company, name the buyer, and ask whether they have closed with them. It costs nothing and the answer is frequently immediate.
Check county records
Deeds are public. A buyer who tells you they buy several houses a year in Tulsa County should appear in the county clerk's records as a grantee. Somebody who has never appeared is not necessarily a problem and it is worth knowing, and it is covered in our county records guide.
Applying this to us
We buy properties ourselves and we expect to be asked. Ask us for proof of funds, ask which title company we close at and whether you can choose a different one, ask the title company about us, and get two or three other offers.
A buyer who is uncomfortable with any of that has told you something useful. That includes us, and we would rather you checked than took our word, because the alternative is a market where nobody checks anybody and the operators who benefit from that are not the ones doing this properly.
Our guide on whether cash buying companies are legitimate sets out the wider checks.
The short version
Six things worth knowing
- A bank statement or bank letter. Not a screenshot, not a promise, not a pre-approval
- Check the name matches the contract, the date is recent, and the amount covers the purchase
- Call the bank on a number you looked up yourself
- For a financed buyer, ask pre-approved or pre-qualified, and which loan type
- Earnest money goes to the title company and should be deposited promptly
- Ask a local title company whether the buyer closes what they contract
Frequently asked questions
What is proof of funds?
Documentation showing a buyer has liquid funds available to complete the purchase. In practice a bank statement showing the account holder's name and an available balance, or a bank letter on institution letterhead confirming funds on deposit.
Why should I ask for it?
Because an offer is worth nothing if the buyer cannot complete, and the moment you accept you take the property off the market. A buyer who disappears in week three costs you weeks, days on market, and possibly a deadline you cannot recover.
Is a screenshot of a banking app acceptable?
No. It is trivially faked and increasingly common. Ask for a statement or a letter on institution letterhead with a name, a date and a contact number.
How recent should the document be?
Within the last thirty days. A statement from eight months ago tells you about eight months ago and nothing about whether the money is there now.
Should the name match the contract?
It should, and where it does not that is a question rather than automatically a problem. Funds in a different individual's or entity's name may be legitimate and you are entitled to understand the arrangement before relying on it.
Can I verify the letter is genuine?
Call the bank using a number you look up independently rather than the one printed on the letter. Banks will generally confirm or decline to confirm, and either response tells you something useful.
Is it normal for parts to be redacted?
Account numbers being partially hidden is normal and sensible. The name, the institution, the date and the balance should not be redacted, and a document missing those is not proof of anything.
What if the buyer is using a line of credit?
That is legitimate and worth understanding, because a facility can be withdrawn in a way that cash on deposit cannot. Ask for the letter, ask about the terms, and ask what happens if the facility is reduced.
What should I ask a financed buyer instead?
For a pre-approval rather than a pre-qualification, the lender name and a named loan officer with a phone number, the loan type, the down payment and proof of those funds, and whether their own house sale is a condition.
What is the difference between pre-qualified and pre-approved?
A pre-qualification is typically based on information the borrower stated, without verification. A pre-approval generally involves the lender checking income, assets and credit. Ask which one it is, because they are considerably different in strength.
Why does the loan type matter?
Because conventional, FHA, VA and USDA loans have different property condition requirements. On an older Oklahoma house, some programmes will decline over things another would accept, and knowing which you are dealing with tells you where the risk sits.
How much earnest money should I ask for?
Enough that the buyer has something meaningful at risk. Somebody with almost nothing at stake walks away far more easily. What matters as much is that it goes to the title company rather than to the buyer, and that it is deposited promptly.
Where should earnest money be held?
With the title company or closing attorney, never with the buyer or their agent. A buyer who wants to hold it themselves is asking you to trust an arrangement that exists to remove exactly that need.
What if a buyer refuses to provide proof of funds?
End the conversation. There is no legitimate reason to refuse and every serious buyer expects the request. Offence at being asked is itself an answer, because professional buyers are asked this constantly.
What if they say they will provide it after I sign?
That is backwards and it removes your only leverage. The point of the document is to inform your decision to accept, not to reassure you afterwards.
Is a long inspection period a warning sign?
On a cash offer, frequently yes. A genuine cash buyer with their own money does not need thirty days to decide. Combined with very small earnest money it is one of the clearest signals of a buyer intending to find somebody else to close.
How do I check a buyer's track record?
Ring a local title company, name the buyer and ask whether they have closed with them. It is the most reliable check available to a seller, it costs nothing, and almost nobody uses it.
Can I look them up in public records?
Yes. Deeds are public, so a buyer who says they purchase several houses a year in the county should appear in the county clerk's records as a grantee. Somebody who never appears is worth asking about.
What if several things look slightly off?
The pattern matters more than any single item. One thing might be nothing. Three together is a picture, and at that point the sensible response is to get other offers rather than to talk yourself into this one.
Should I ask you for proof of funds?
Yes, and ask the title company about us, and get two or three other offers. We would rather you checked than took our word, because a market where nobody checks anybody benefits the operators who are not doing this properly.
Does asking offend serious buyers?
No. A professional buyer is asked this constantly and has the document ready. Offence is a response from somebody who does not have one, and it is one of the more reliable signals available to you.
What is the single most useful check?
Calling a local title company and asking whether the buyer closes what they contract. Ten minutes, no cost, and it draws on people who watch every operator in the market year after year.
We buy houses for cash, so we are asking you to apply this to us as well as to everybody else. That is the point. We are not attorneys and a real estate attorney or your title company can advise on your specific contract.