What proof of funds is, and why you should ask for it
A proof of funds (POF) is a document, such as a bank statement or a letter from a bank or other financial institution, showing that a buyer has the money for a purchase. Real estate sellers and agents commonly ask for it, especially when a buyer says they’re paying cash.
It matters because a cash offer’s main advantage is certainty. If there’s no money behind it, that advantage is gone, and you may have taken your house off the market for weeks for a buyer who can’t close. Asking costs nothing and takes a day.
What a genuine proof of funds should show
A real proof of funds holds up on five points. Check each one:
| Check | What you want to see | Why |
|---|---|---|
| Name | The same person or company named as buyer on your contract | Money in a different name isn’t committed to your deal |
| Amount | At least the purchase price, plus closing costs | A balance below the price means borrowing or partners |
| Date | Issued within roughly the last 30 days | Every POF carries a date; balances change and letters go stale |
| Source | A bank, credit union or brokerage on its own letterhead, or a full statement | Screenshots and spreadsheets are easy to edit |
| Contact | A named officer or branch you can reach | Lets you confirm the document is real |
If the buyer is an LLC, look up the company on the Ohio Secretary of State business search. Confirm it’s active and that the name matches the contract and the POF exactly. A one-letter difference can mean a different company.
How to confirm it’s real
A document can look official and still be fake. Verifying takes two calls.
- Call the bank yourself. Find the branch’s number on the bank’s website, not on the letter. Ask whether the letter was issued by that bank and whether the person who signed it works there. Banks usually won’t share the balance, but they can confirm the letter.
- Call the title company. Use a number you found independently. Ask whether it has an open file for your property with this buyer, and whether the buyer’s earnest money has been received.
The second call is the stronger test. Earnest money is a deposit held in escrow or trust, often by the title company, to show the buyer is serious. In the U.S. it typically runs about 1% to 3% of the price. If the deposit was due three days after signing and hasn’t arrived, you’ve learned something important.
Red flags in a proof of funds
Treat these as reasons to slow down or ask for more:
- The name is blacked out or missing. You need to see who owns the money.
- It’s from someone else. “My partner’s account,” “our private lender” or “our investor group” means the buyer doesn’t control the money.
- It’s a hard money or “transactional funding” letter. That’s a loan commitment, not cash. The closing then depends on that lender.
- The balance barely covers the price. Ask how closing costs and any repairs will be paid.
- It arrived only after you signed. Ideally you see it before you agree to the deal.
- The buyer won’t let you verify it. A real buyer will tell you which bank to call.
Some of these are typical of wholesalers, who sign a contract with you and then look for another investor to buy it. You can read about that model on wholesaler vs direct cash buyer and spot it in the contract using how to read a cash buyer purchase agreement.
Individuals, companies and retirement money
Who the buyer is changes what good proof looks like.
An individual buyer should show an account in their own name. If they’re combining accounts, ask to see each one, and make sure the total covers the price and closing costs.
A company buyer, usually an LLC, should show an account in the company’s name. If the proof is in a member’s personal name, ask how the money will get to the company before closing, and consider asking that the person sign the contract too.
Some investors buy through a self-directed retirement account or with proceeds from another sale. That can be legitimate, but the money moves through a custodian or an intermediary, which adds steps. Ask who will wire the funds and confirm with the title company that it expects them.
In every case, the question is the same: will the money that arrives at closing come from the name on the contract?
Build the proof into your contract
You can make the money part of the deal itself:
- Set an earnest money deadline. For example, the deposit is due to the named title company within two business days of signing.
- Make the deposit meaningful. Enough that the buyer loses something real by walking away.
- Remove funding conditions. Watch for “subject to financing” or “subject to partner approval” in a cash contract.
- Keep the inspection period short, so you aren’t off the market for long if the money never shows.
If the buyer walks away without a valid contingency, the seller is typically entitled to keep the earnest money. More on that in can a cash buyer back out.
What we do
We buy houses directly, put the offer in writing and close through a local title company, so the money moves the way it should. If you’d like to see the full process, it’s on how it works.
