The short answer? Never, it’s a loan. The “how it works in real life” answer? It depends.
A few short years ago, a “cash” offer meant “This offer has no financing contingencies, so if I can’t close due to the inability to find the money, you can keep my deposit.”
However, sellers, including REO bankers, found that a buyer who couldn’t close with their own money tied up the property, while the seller was thinking they actually had the funds to close. This problem (for the sellers) became worse over time as many newbie investors tried to tie up properties to assign the contract. As a result, many sellers began requiring a proof of funds to show the money was in the buyer’s account.
There are many listings on auction sites and MLS that say “Cash only.” Some say “Cash or rehab loan”, which is helpful. The online auction houses like Hubzu and Auction.com (which are simply marketplaces for the REO bankers) require that the name of the buyer and the name on the bank account be the same.
Is this universally the case? No. Some sellers consider that a hard money loan, without the hoops and requirements of a residential loan, is good enough. Some sellers either aren’t aware, or don’t care, about the distinction between cash (your own) and hard money (someone else’s cash).
So how does this apply to you? You can try submitting your offer with a hard money approval. If it works, great. If it doesn’t, the seller (or the seller’s listing agent) will tell you that they need an actual proof of funds in your name. Do not expect the hard money lender to provide a bank statement for you, it won’t happen. An approval is probably the best you are going to get. Sometimes you’ll be surprised and your offer will be accepted, and sometimes it won’t. But you know the saying “You miss 100% of the shots you never take.”