Home Buying in 98366>Question Details

Dexter, Home Buyer in 98367

"Proof of fund" - In SHORT SALE situation, when does the bank need to see our "PROOF OF FUND" for cash buyer? thank you

Asked by Dexter, 98367 Wed Dec 15, 2010

My agent did ask me 'prrof of fund" when we made an offer ( /- 40 days ago) and then he ask me again since now it is older than 30 days. Showing a bank how much we have - I do not think is a smart idea?

Help the community by answering this question:


In a short sale transaction the lender(s) are making a decision to allow a sale of the property for less than the total amount owed. Usually, they will allow the seller to go on their way without any payment of the debt after the sale but this is not always the case either.

To make this decision which will allow you to purchase the property on the agreed terms all banks do require that you have the cash to close, whether in the form of proof of cash in the bank or a pre-qualification lender from an approved lender.

If you really want to purchase a property in a short sale and are satisfied with the price and terms negotiated it is greatly to your advantage to prove that you have the funds to back up the offer you have made. They will take your offer much more seriously if you do and this sometimes means you can negotiate a better deal.

On the other hand there is no need to disclose more than the amount necessary to close the transaction so I would ask your bank to provide proof of funds for only the amount offered.
0 votes Thank Flag Link Wed Dec 15, 2010
Michael, thanks for your advice. That was exactly we did yesterday, we got a simple statement from our banker stated that we have enough fund to cover the purchase price+closing costs but without going into details how much exactly we have in our bank account.
Thanks again for your reconfirmation
1 vote Thank Flag Link Fri Dec 17, 2010
Thanks all "Jim, Jirius, Ed, and Tonya" very much for your insight information.
Now I feel much less being duped by the bank.
Again thank you for taking the time to help us.
1 vote Thank Flag Link Wed Dec 15, 2010
It is never fair, but the banks hold all the cards & all the power. If you do not want to play their little games, they will never give you what you want. It is really that simple. They can, and will ask for anything they want.
1 vote Thank Flag Link Wed Dec 15, 2010
Not going to waste alot of anyones time. Tonya is 100% correct. In short sales, it is very common to have to update info several times during the process since they take so long.
Web Reference: http://skagitshortsales.com
1 vote Thank Flag Link Wed Dec 15, 2010
There is no need to show the bank how much you have; just that you have enough to close the transaction as contracted. It would be unwise to show any seller or short sale bank that you have enough cash to pay more than you offered. And do not provide bank statements or anything else with sensitive information. I usually have clients produce a letter from their bank manager declaring that they have adequate cash on deposit to fulfill the contract price and terms.
0 votes Thank Flag Link Wed Dec 5, 2012
Great question! Good luck with your short sale Dexter: the key is to hang in there and not get discouraged!
0 votes Thank Flag Link Wed Dec 5, 2012
As a strong negotiating tool, I would provide proof of funds with the contract when it is sent to the lender. Please don't use bank or brokerage statements to substantiate your funds. You do not want the lender to know your cash availability as that might cause a counter offer. Instead, use a letter signed by your banker or broker stating that you have adequate cash on hand to satisfy your offered purchase price plus normal closing costs.
0 votes Thank Flag Link Wed Dec 15, 2010
It's standard procedure with the banks. In fact it is very common in the real estate market all together. I've had to send it with all my cash offers regardless if they are short sales, bank owned or resales.
0 votes Thank Flag Link Wed Dec 15, 2010
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