La Jolla · Buyer guides · Process

Cash offers in La Jolla: deposits, appraisal and proof of funds

A cash offer means you plan to buy without a new home loan. This guide explains the parts of a California cash offer in plain words.

I’m Weston Clark, Founding Member of the Dickinson-Clark Team at Compass. I help buyers in La Jolla and coastal San Diego read each part of a cash offer before they sign. Your lawyer can confirm what your own offer says.

Talk to Weston Jump to FAQ Guides hub

Related: Guides · Buying & selling · Seller prep · La Jolla · Closing costs · 1031 exchange · Second home · Multiple offers

What a cash offer means

A cash offer is a written offer to buy a home where you pay the full price with money you already have. No new bank loan is part of the deal. It does not promise the seller will say yes, and it is not advice to give up any of your rights.

This page covers five parts:

• How the offer says you will pay
• The deposit you put down when the offer is accepted
• Your choice about the appraisal (a written opinion of what the home is worth)
• Proof that you have the money
• How cash changes the loan part of the offer

The main source is teaching material from the California Department of Real Estate (DRE), the state office that licenses agents. It is a good start, but it is not advice on your own deal.

How the offer says you will pay

A California home offer has a section on how you will pay. The DRE calls it Finance Terms. The usual choices are all cash, a new loan, or taking over the seller’s loan. When a seller will take cash, the DRE says the offer must at least state the price in cash.

• All cash means you pay without a new loan.
• Escrow still opens after both sides sign. Escrow means a neutral company holds the money and papers until the sale is done.
• Most offers have a loan contingency unless both sides agree to leave it out. A contingency is a condition that must be met, or the buyer may be able to back out.
• A cash offer may leave out the loan contingency if the written contract says so.

The exact words live in your written offer. Check them with your lawyer before anyone signs.

The deposit (earnest money)

Earnest money is the first money you put down to show you are serious. The DRE also calls it a good faith deposit. It works the same way for cash and loan offers.

• In Southern California, including San Diego and La Jolla, escrow instructions are usually written after both sides sign the offer. Escrow instructions are the written steps escrow must follow. Your deposit usually goes to escrow under those steps.
• The deposit may not reach escrow the same day the signed offer does. Ask escrow about timing.
• State rules (Regulation 2832) let an agent hold your deposit check uncashed until the seller accepts, if the papers say so and the seller is told. After that, the money goes to escrow or a trust account on a set timeline.
• Some offers say what happens to the deposit if a buyer backs out. One example is liquidated damages, which means the seller keeps the deposit as the set penalty. These terms have legal effects, so ask your lawyer. The amount is written in the offer.

Your appraisal choice

An appraisal is a written opinion of what a home is worth. An appraisal contingency says what happens if that value comes in below your price. The DRE says you must give up (remove) a contingency in writing. It also says agents should explain what each contingency means.

• Waiving it means you give up the right to back out over a low appraisal, as the contract allows. The contract sets how you give notice and what that means.
• The federal consumer office (CFPB) says lenders usually order an appraisal when you borrow. With all cash there may be no lender appraisal, but your offer can still say what you want to do about one.

The DRE escrow guide says escrow does not advise on removing contingencies. A licensed agent or a lawyer does. Ask your lawyer before you sign.

Proof that you have the money

Proof of funds means papers that show you have the money to buy. The DRE also calls this verification of funds. You give them when the offer or the seller asks.

• Bank letter: a letter from your bank about the money you have, if the bank offers one.
• Account statements: statements or summaries both sides agree to share.
• Escrow note: escrow can confirm when it has your deposit or closing money.
• Other papers: only what your written offer asks for.

In DRE sample timelines, checking funds sits next to other checks the buyer makes before closing. Ask your lawyer and escrow what your offer needs.

Where this fits with other guides

You can talk about fees with Weston directly. This form does not give a commission quote.

Related guides

Talk with Weston about a cash offer

Tell me where you are with your cash offer. I can walk you through each part of the written offer, and your lawyer can confirm it.

Or call (858) 997-8998 · weston@sandiego.homes · Search on Compass

Sources

• CA DRE — Reference Book Ch. 20 Basic Contract Provisions · Ch. 8 Escrow · Ch. 21 Trust Funds
• CA DRE — Ch. 1 · Ch. 10 Agency · Surviving the Real Estate Escrow Process
• CFPB — What are appraisals… · HUD — Fair Housing Act overview
• Internal: guides, buying & selling, seller prep, La Jolla