How to Verify Proof of Funds From Cash Buyers
Proof of funds (POF) verifies that a buyer has the financial ability to close. In wholesaling, unverified buyers are the number one cause of failed assignments. A buyer who cannot actually fund the purchase wastes your time, damages your relationship with the seller, and can cost you your earnest money.
Acceptable proof of funds
- Bank statement: Most reliable. Shows account balance, account holder name, and date. Should be within 30 days and show sufficient funds for the purchase price plus estimated closing costs.
- Hard money pre-approval: A letter from a hard money lender stating the borrower is pre-approved for a specific loan amount. Verify the lender is real by checking their website and calling the number on the letter.
- Line of credit documentation: Shows available credit that can be drawn for the purchase.
- Self-directed IRA/401k statement: Some investors purchase real estate through retirement accounts.
Red flags for fake POF
- Blurry or pixelated documents (photoshopped)
- Account numbers fully visible (legitimate buyers redact partial account numbers for security)
- Balance exactly matches the purchase price (no buffer for closing costs)
- Statement date is months old
- Generic "proof of funds" letter not on bank or lender letterhead
- Buyer is reluctant to provide any documentation
Verification steps
- Request POF before showing the property or providing the address (for your best deals)
- Verify the document appears legitimate (bank letterhead, recent date, sufficient balance)
- For hard money letters, call the lender directly to confirm
- Cross-reference the buyer's name on the POF with their transaction history (county records)
- Keep POF on file in your CRM with an expiration date (refresh every 60-90 days)
When to require POF
For your best deals and VIP access, require POF before sending deal details. For general deal blasts to your broader list, POF at the time of offer submission is sufficient. The key is verifying before you execute an assignment agreement, not after.
Related guides
- How to Qualify Cash Buyers
- Building Your Buyer List
- Managing Multiple Offers
- How to Assign a Contract
- Using a CRM for Buyers