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Proof of funds is a critical component in real estate transactions, mainly recognized by agents who require it to ensure legitimacy from buyers. Many sellers, lacking knowledge, may sign contracts with questionable earnest money amounts and numerous contingencies, which can lead to uncertainty in closing. The distinction between soft and hard proof of funds is also significant; while soft proof is merely a letter indicating pre-approval, hard proof can provide actual bank statements or guaranteed funding for a specific property. By educating sellers on these nuances, the speaker establishes a stronger competitive edge, emphasizing that not all offers are equally reliable, as the certainty of closing is paramount.