The Ultimate Guide to Escrow

What is escrow and why is it needed?

Once you've made a purchase offer for a property that you are interested in, the offer must be accepted by both parties. The transaction then heads into what is known as escrow. Escrow is an arrangement in which a neutral third party, called an escrow officer, holds documents and funds on behalf of a buyer and seller, and distributes them according to the buyer's and seller's instructions.

Your real estate broker will keep a close eye on the escrow process and keep you informed of how everything is progressing. Once everything is completed during this escrow process, the funds will be disbursed to the seller and you will be given the keys to your home. 


  • Escrow fees charged by the escrow agent are typically split equally between the buyer and seller
  • If a VA loan is involved, the buyer is not required to pay any escrow fees, so it's up to the seller to do so

What the Seller does in the escrow process:

  • Deposits the executed deed to the buyer with the escrow officer
  • Deposits evidence of any required repair work
  • Deposits other required documents such as tax receipts, addresses of mortgage holders, insurance policies, etc.

What the Buyer does in the escrow process:

  •  Deposits funds required, in addition to any borrowed funds to pay the purchase price with the escrow officer
  • Deposits funds sufficient for home and title insurance
  • Arranges for any borrowed funds to be delivered to the escrow officer
  • Signs any deed of trust or mortgages necessary to secure loans
  • Approves any inspection reports, title insurance commitments, etc. called for by the purchase and sale agreements
  • Fulfills any other conditions specified in the escrow instructions
  • Purchaser arranges for fire insurance on the new property

What the Lender does in the escrow process:

  • Deposits proceeds of the loan to the purchaser
  • Directs the escrow officer on the conditions under which the loan funds may be used

What the Escrow Officer does in the escrow process:

  • Opens the order for title insurance, if the lender has not already ordered
  • Obtains approvals from the buyer on title insurance report, and any/all inspections
  • Receives funds from the buyer and/or lender
  • Prorates insurance taxes, rents, etc.
  • Disburses funds for title insurance, recordation fees, real estate brokerage, lien clearance, etc.
  • Prepares final statement for each party, indicating amounts to be disbursed for services and any further amounts necessary to close escrow
  • Records deed and loan documents, delivers the deed to the buyer, loan documents to the lender, and funds to the seller, closing the escrow

What we do in the escrow process:

  • Communicates with all parties on a regular basis to assure the process is proceeding smoothly with all required documents and facts available
  • Acts to correct and eliminate any potential problems or delays that may occur along the way
  • Be available for any questions or concerns

Closing the Escrow

Once all the terms and conditions of the instructions of both parties have been fulfilled and the closing conditions satisfied, the escrow is closed once the safe and accurate transfer of property and money has been accomplished. Then, you receive the keys to your home!

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