Escrow is the neutral process that carries a transaction from an accepted offer to closing. Here’s what it actually involves, and what to pay attention to as it happens.
What Escrow Actually Is
Escrow is a neutral third party, typically an escrow company or attorney depending on the region, that holds funds and documents and makes sure both sides meet their obligations before anything changes hands. Neither buyer nor seller controls escrow directly. That neutrality is the whole point. It protects both sides from the other backing out of their end after receiving money or a signed deed.
What Happens When Escrow Opens
Once your offer is accepted, escrow opens and your earnest money deposit typically gets wired in within a few days. The escrow officer orders a preliminary title report, coordinates with your lender if you’re financing, and starts tracking every deadline in your contract, from inspection contingencies to loan approval to closing.
What Title Insurance Actually Is
Title insurance protects you against problems with the property’s ownership history that a public records search didn’t catch, things like an undisclosed lien, a forged signature somewhere in the chain of ownership, or an heir who wasn’t accounted for in a previous sale. There are two policies in a typical transaction: a lender’s policy, which protects your lender’s interest and is required if you’re financing, and an owner’s policy, which protects you directly and is optional but strongly worth having. It’s a one-time premium paid at closing, not an ongoing cost like homeowners insurance.
Why the Preliminary Title Report Matters
Early in escrow, you’ll receive a preliminary title report showing anything currently recorded against the property, including existing loans, liens, easements, or restrictions. Read this rather than skimming it. It’s your chance to catch something that needs to be resolved before you close, like a lien the seller needs to pay off or an easement that affects how you can use the property.
Coordinating With Your Lender
If you’re financing, escrow works alongside your lender to make sure loan documents, the appraisal, and underwriting conditions are satisfied on the same timeline as everything else. Delays on the lender side are one of the most common reasons a closing date shifts, which is why staying responsive to document requests during this period matters.
Final Walkthrough Checklist
Do your final walkthrough as close to closing as your schedule allows, ideally within a day or two. Check that the property is in the condition you agreed to and that it’s been left broom clean or per the contract terms. Confirm any negotiated repairs were actually completed, and check for the repair receipts or invoices if that was part of the agreement. Test major systems again: faucets, appliances that convey, garage door openers, and anything that was flagged during inspection as something the seller agreed to fix. Make sure nothing has been removed that was supposed to stay, like fixtures or appliances listed in the contract.
Closing Day
You’ll sign a set of final loan and closing documents, funds get transferred, and the deed is recorded with the county. Once recording is confirmed, the home is officially yours and you get your keys, typically the same day or very shortly after signing.
Moving Checklist After Closing
Once you’ve closed, a few things are worth doing right away rather than letting them slide. Change the locks, since you don’t know how many sets of keys exist from previous owners or agents. Set up utilities in your name if you haven’t already, including water, gas, electric, and trash. Update your address with the post office, your bank, and anywhere else that matters. Locate the main water shutoff and electrical panel so you’re not searching for them during an actual emergency. And hold onto your closing documents somewhere safe. You’ll want them again at tax time and if you ever sell.
If you want a clear explanation of what’s happening at any point during your own escrow, get in touch.