I came across a deal that looks too good to pass up and made an all cash offer as it can't be financed. Problem is that most of my cash is tied up in a flip property which is set to close in 2-3 weeks at which point I'll have enough cash for the purchase and renovations of the new house.
If my offer is accepted, I expect they will want proof of funds within a couple of days. I don't want the offer to be contingent on the closing of my other place as I think that this property will have multiple offers and I don't want mine to look weak. I was wondering if showing sufficient cash reserves in index funds can work for proof (even though I don't intend on using this money)? I would be able to present about 40% of the cash needed in my account and the other 60% in index funds. Any advice for another creative work-around?
That works as long as it is readily accessible. I’ve had clients use stock brokerage accounts, mutual funds, etc.
I agree with @Wayne Brooks - sellers want to see financial strength and that you are a serious buyer. They don't care where the cash ultimately comes from.
I assume if push came to shove, your index funds could be liquidated in a few days? So there you go...you have proof of funds. Conversely, a CD or an IRA/401K that is less liquid might raise some eyebrows (but would probably still work, accompanied by a brief explanation such as the one you provided above).
If you end up using a different source of funds, the seller will not care in the least.