Heard words like escrow, Mello-Roos, or bluff setback while touring coastal San Diego homes and wondered what they really mean? You’re not alone. Buying your first home here comes with unique terms, timelines, and coastal considerations. This plain‑English glossary breaks down the essentials you’ll see in listings, offers, lender and escrow paperwork, HOA packages, and disclosures so you can move forward with confidence. Let’s dive in.
How your San Diego purchase works
Escrow
Escrow is a neutral third party that holds funds and documents until all conditions of the sale are met. After your offer is accepted, escrow opens, your earnest money deposit is placed, and step-by-step instructions guide the closing. Escrow coordinates with your agent, lender, and title to manage signatures, funds, and final recording.
Escrow instructions
These are written directions to escrow that outline exactly how the transaction should proceed. They define who pays what, when funds are released, and what must be completed before closing. You’ll sign them early in escrow.
Title and title insurance
“Title” refers to your legal ownership rights. Title companies research the property’s history and issue title insurance. Buyers typically receive an owner’s policy and lenders require a lender’s policy, which protect against covered title defects recorded before closing.
Closing and settlement
Closing or settlement is when you sign your final documents, the lender funds the loan, escrow disburses money, and the deed is recorded. In California, you usually receive keys after recording and funding are confirmed.
Recording, deed, and vesting
Recording is when the county officially records your deed, which shows that ownership has changed. Vesting describes how you hold title, such as individually or with co-owners. Ask your escrow officer or advisor about vesting options that fit your situation.
Who does what
- Real estate agent: advises you on offers, negotiations, inspections, and timelines.
- Escrow officer: manages funds and paperwork as a neutral coordinator.
- Title company: researches the title history and issues title insurance policies.
- Lender: underwrites your loan, orders the appraisal, and funds at closing.
Money and costs to expect
Earnest money deposit (EMD)
Your EMD shows good faith and is credited toward your purchase at closing. It commonly ranges around 1 to 3 percent of the price, and amounts can be higher in competitive coastal neighborhoods. If you default under the contract, the seller may be allowed to keep the EMD, depending on your contingencies and the agreement.
Down payment
Your down payment depends on the loan program. Conventional loans vary, FHA offers lower minimum down payments, and eligible VA buyers can have no down payment. Putting 20 percent down on a conventional loan typically avoids private mortgage insurance.
Closing costs
Buyer closing costs usually include lender fees, appraisal, escrow and title fees, recording fees, and prepaid items like taxes and insurance. Sellers often pay transfer taxes and broker commissions, but responsibilities are negotiable. Ask your lender for a Loan Estimate early to understand your cost breakdown.
Property taxes and supplemental bills
California reassesses property value when ownership changes. After you close, you will receive standard tax bills on the normal schedule, plus possible supplemental tax bills reflecting the new assessed value. Plan for these additional bills in your budget.
Mello-Roos and special tax districts
Some newer or master-planned communities have Mello-Roos or other special assessments that add to annual property taxes. Review the disclosure package and HOA documents to understand any extra taxes before you remove contingencies.
Mortgage insurance (PMI and FHA)
Private mortgage insurance applies to many conventional loans with less than 20 percent down. FHA loans use a mortgage insurance premium structure. These costs protect the lender and are part of your monthly payment calculation.
Financing and appraisal basics
Preapproval vs. prequalification
A prequalification is a quick estimate based on self-reported information. A preapproval verifies your income, assets, and credit with documentation, which makes your offer stronger in San Diego’s competitive coastal market.
Loan types: conventional, FHA, VA
- Conventional: flexible terms and down payments; 20 percent down typically avoids PMI.
- FHA: lower minimum down payment, subject to program limits and rules.
- VA: for eligible veterans and service members, often with no down payment.
Financing contingency
This protects you if your loan cannot be obtained under the terms in the contract. If you remove the financing contingency and the loan later falls through, you may risk your EMD. Your agent will help tailor this to market conditions.
Appraisal and gaps
Lenders order appraisals to confirm value. If the appraisal is below the purchase price, common paths include renegotiating, you bringing additional cash, the lender reducing the loan amount, or canceling if you have an appraisal contingency. Appraisals are focused on value, not full condition.
Interest rate lock
You can lock your interest rate for a set period, commonly 30 to 60 days. Locks help protect you from rate changes but may have fees and expiration dates. Coordinate your lock with the escrow timeline to avoid extensions.
Inspections and property condition
Home inspection
A general home inspection evaluates the property’s systems and structure. You can also add specialized inspections for roof, sewer, foundation, or engineering if needed, especially for unique coastal homes.
Pest or WDO inspection
Wood-destroying organism inspections are common in San Diego. Lenders often require termite clearance before funding. If repairs are needed, you can negotiate completion or request an escrow holdback for agreed items.
Repairs, credits, and “as-is”
After inspections, you can ask for repairs or a credit, or accept the property as-is. The seller is not required to agree, so strong negotiation and clear documentation help shape outcomes.
Appraisal vs. inspection
An appraisal confirms market value for the lender. An inspection assesses condition for you. Both matter, but they serve different purposes.
Contingencies, timelines, and your options
Contingencies you may use
Common contingencies include inspection, appraisal, financing, and title. These give you time to investigate, confirm value, and secure your loan.
Typical contingency periods
Inspection windows often range from about 7 to 17 days in Southern California, though buyers sometimes shorten them to compete. Loan contingencies often run 17 to 21 days or more, depending on the program. Timelines are set by your contract and the market.
Removing contingencies
You remove contingencies in writing when you are satisfied with inspections, financing, and valuation. Before signing, confirm that major issues are addressed and your lender is on track.
Right to cancel, default, and liquidated damages
Your right to cancel is governed by the contract and your contingency periods. If you default outside those protections, liquidated damages provisions may allow the seller to keep your EMD. Ask your agent to help you understand these sections before you sign.
What happens to your EMD
If you cancel within a valid contingency period, your EMD is typically returned. If you breach the contract, the seller may claim the deposit, subject to the agreement’s terms and applicable law.
HOAs and neighborhood rules
HOA, CC&Rs, and bylaws
If you buy a condo or a home in a planned community, you will receive HOA documents that govern property use. Key documents include CC&Rs, bylaws, meeting minutes, insurance certificates, and rules and regulations. Read these early, especially in areas like Pacific Beach or Mission Beach where condo living is common.
Budgets, reserves, and reserve studies
A reserve study evaluates the HOA’s long-term repair needs and funding levels. Low reserves can lead to special assessments later. Review the budget, reserve study, and any notices of planned assessments.
Common rules to review
Look for rental caps, guest and parking rules, age-restricted provisions, and pet policies. Rules vary widely across San Diego communities and HOAs. Confirm any limits that affect your plans before removing contingencies.
Historic and coastal rules
Some neighborhoods have historic or coastal overlays that impact exterior changes. Confirm whether your property sits in a regulated area before planning renovations or additions.
Required California disclosures
Transfer Disclosure Statement (TDS)
Sellers must disclose known material facts about the property’s condition. Review the TDS carefully for past repairs, leaks, or system issues.
Natural Hazard Disclosure (NHD)
California requires disclosure of whether the home lies in mapped hazard zones, such as flood, fire hazard, earthquake fault, or seismic hazard zones. Use this to evaluate insurance needs and long-term risk.
Seller Property Questionnaire
This form expands on known conditions and property history. Read it alongside inspection reports to connect the dots.
Lead-based paint disclosure
For homes built before 1978, federal law requires a lead-based paint disclosure and an EPA pamphlet. You may also choose a lead inspection or risk assessment.
San Diego coastal specifics
Coastal Commission, bluff setbacks, and seawalls
Coastal homes may be subject to California Coastal Commission or City of San Diego rules. Bluff-top properties face unique setbacks, erosion risks, and restrictions on seawalls. Always verify permits, recorded easements, and shoreline protections.
Flood and tsunami zones
Some coastal and low-lying neighborhoods fall within FEMA flood zones or local inundation maps. Lenders may require flood insurance for these areas. Confirm your zone and factor insurance costs into your budget.
Sea-salt corrosion and maintenance
Salt air can accelerate corrosion on metal fixtures, railings, and exterior finishes. Budget for ongoing maintenance and consider materials designed for marine environments.
Short-term rental rules
San Diego and many HOAs regulate short-term rentals. If you plan to rent, confirm both city rules and HOA restrictions, which can vary by neighborhood and building.
Utilities and parking
Dense beach areas can have unique utility assessments and tight parking rules. Review HOA and city guidelines early so you are not surprised after closing.
Typical San Diego escrow timeline
- Offer and acceptance: you write an offer using standard California forms. After acceptance, you deposit your EMD into escrow.
- Escrow opens: escrow issues instructions and title orders a preliminary report while your lender begins underwriting.
- Inspections and contingencies: inspection periods often run about 7 to 17 days; loan contingencies commonly 17 to 21 days or more. Appraisal is ordered by your lender.
- Contingency removal: you remove contingencies in writing or cancel within your timelines. Title issues and HOA document review should be resolved.
- Closing: you complete your final walk-through, sign loan documents, the lender funds, and escrow records the deed. Keys are usually released after recording and funding.
- Overall length: 30 to 45 days is common in San Diego. Faster 21-day closings can happen with cash or streamlined loans, while 60-plus days occur when underwriting is complex or seller leasebacks are involved.
Buying along the San Diego coast should feel exciting, not confusing. If you want a clear plan, smart negotiation, and a hospitality-first experience from La Jolla to Del Mar, we’re here to help. Reach out to The Sirin Daum Group for a guided first purchase that balances lifestyle and long-term value.
FAQs
How much earnest money should a first-time buyer offer in San Diego?
- Common ranges are around 1 to 3 percent of the purchase price, but competitive offers in coastal neighborhoods may include larger deposits. Align the amount with your contingencies and risk tolerance.
What’s the difference between an appraisal and an inspection for a San Diego home?
- The appraisal is ordered by your lender to determine market value, while the inspection is ordered by you to evaluate condition. Both are important and serve different purposes.
What is an HOA reserve study and why should I care?
- A reserve study estimates long-term repair needs and funding levels for the HOA. Insufficient reserves can lead to future special assessments that raise your costs.
What are my options if the appraisal comes in low on a coastal property?
- You can renegotiate price, bring extra cash to cover the difference, accept a reduced loan amount, or walk away if protected by an appraisal contingency.
Are there extra inspections to consider for coastal San Diego homes?
- Consider structural or engineering evaluations for bluff or seawall concerns, and look for salt-related corrosion or deck and railing safety issues.
Will I receive a supplemental property tax bill after closing?
- Yes, California may issue a supplemental assessment after ownership changes, in addition to regular property tax bills. Plan for these bills in your post-closing budget.
