Cash offer is one of the most misunderstood phrases in real estate. Sellers hear it and sometimes picture a buyer showing up with a briefcase and a handshake. What it actually describes is the absence of a lender in the transaction, nothing more.
Cash offer means no financing contingency, not no escrow
A financed offer depends on the buyer's lender approving a loan and an appraisal supporting the price, either of which can cause the sale to fall through. A cash offer removes both risks because there is no lender in the deal. Funds still move through a licensed California escrow holder exactly as they would in a financed sale.
Every California real estate sale, cash or financed, closes through escrow. Escrow is a neutral third party who holds funds and documents until every condition of the contract is satisfied, then records the deed and disburses funds. Removing the lender does not remove escrow, and any buyer or transaction that claims to skip escrow entirely is not operating within normal California practice.
What actually changes with a cash offer is the contingency structure. A financed offer typically carries a loan contingency and an appraisal contingency, either of which lets the buyer walk away or renegotiate if the loan falls through or the appraisal comes in low. A genuine cash offer has neither, which is the real source of the speed and certainty cash offers are known for.
How to check that an offer is actually cash
The way to verify a cash offer is real is a proof of funds letter: a bank or brokerage statement, dated within the last 30 days, showing funds available in an amount covering the purchase price, in the name of the buyer or buying entity on the contract.
A proof of funds letter is the standard document a legitimate cash buyer provides, and it should be dated recently rather than months old, and it should show sufficient funds under the exact name that will take title. A statement showing a different entity name than the one signing the purchase agreement is worth asking about directly, since it can signal the deal will be assigned to a third party before closing.