Short answer
Proof of funds is a document that shows a buyer has the money to close, usually a recent bank or brokerage statement or a letter from the financial institution. Yes, ask for it before you sign or take the house off the market. It tells you whether a cash offer is real.
What it is
Proof of funds, often shortened to POF, is evidence that a buyer has enough money available to complete the purchase. Typical examples are a recent bank statement, a brokerage statement, or a letter on the institution's letterhead that confirms a balance. Some buyers show a loan commitment from a hard money lender instead, which is not cash in their account but can fund the deal.
The point is simple. A cash offer is only worth the cash behind it.
What to look for
Check that the name on the document matches the buyer named in the offer. Check the date, and make sure it is recent. Check that the balance covers the full price plus closing costs. If the buyer is a company, the account should be in the company's name or the document should explain how funds will be provided.
You can redact account numbers before sharing, and a buyer may do the same. What you need to see is the name, the institution and the amount. If a buyer refuses to show anything, that is information too.
What proof of funds does not prove
A statement shows a balance on one day. It does not guarantee the money stays there, and it does not show the buyer will follow through. It also says nothing about whether the buyer plans to assign the contract to someone else, which Pennsylvania treats as a separate disclosure issue under Act 52 of 2024.
The strongest protection is the closing itself. Use a title company or real estate attorney as the settlement agent, and do not hand over a deed until the settlement agent confirms funds are in hand.
Where this fits in a cash sale
Ask for proof of funds when you receive a written offer and before you cancel showings or pass on other options. A legitimate buyer expects the request. Kaizen Home Buyers makes cash offers within 24 hours, and you can compare any offer to a listing with an agent, which has its own risk: a financed buyer can lose their loan approval late in the process.
If you have an attorney, ask them to look at how the agreement handles a buyer who cannot close. A cash sale is meant to be the more certain option, so make sure the paperwork reflects that.
A simple script
You can say it plainly: Before I take my house off the market, please send proof of funds in the buyer's name and tell me who the settlement agent will be. A serious buyer will not be offended. You can also ask the settlement agent to confirm in writing that they have been engaged, which gives you a second check.
If the buyer says funds will come from a lender or investor, ask for the commitment, the lender's name and the conditions attached to it. That is no longer a pure cash deal, and the risk is different.