The Process of Going From Putting an Offer to Closing Escrow


Buying a home is a big deal, and is typically an involved process, especially during the time between offer acceptance and the actual closing. “Escrow” is basically when a neutral third party holds on your earnest deposit until all contingencies are met in a real estate transaction. It might sound like a fancy, intimidating term, but if you dot all your “i’s” and cross all your “t’s” leading up to closing, it should be a straightforward process.

Escrow is important because it essentially protects the public and lowers the risk involved in a real estate transaction. By having an experienced third party holding all the legal documents and funds, all parties involved can safely deal with each another and have the peace of mind knowing that no funds will be released and no legal documents will be recorded until all the conditions of the agreement are met.

Opening Escrow

After you choose an escrow company, opening escrow is pretty simple. All you need to do is send the purchase agreement to the escrow officer, which should include the following:

  • Address of the property
  • Purchase price
  • Closing date
  • Name and contact information of the seller
  • Name and contact information of the buyer
  • Name and contact information of the real estate agents (if involved)
  • Commission to be paid to any agents

These pieces of information will help the escrow officer to get the process moving.

Disclosure Preparations

Ideally, sellers should fill out and sign a Seller’s Disclosure package when listing a home. This will outline in detail any pertinent information about the property that a buyer will want to know before submitting an offer. If this step is tackled before the transaction enters escrow, it’s one less thing that will need to be done during the escrow process.

Complete the Escrow Package

You will be sent a package usually within a few days of opening escrow. Within the package are a number of documents that you need to carefully review, fill out, sign, then send back to the escrow officer. Make sure that the instructions in these documents match up precisely with the terms of the purchase agreement.

Obtain Financing

You may have been pre-approved for a mortgage for a certain amount before you even started looking for a home, but once you put in an offer that’s accepted by the seller, this is when the real work for your lender begins.

Your lender will verify your income, credit, debt-to-income ratio, loan-to-value ratio, and will verify if any changes to your credit and debts have changed since you initiated the mortgage application.

If everything is satisfactory to your lender, you’ll be approved for a mortgage for a certain amount. You will be given three business days to carefully read through your Closing Disclosure and compare it against your Loan Estimate to make sure the deal you were offered in the estimate is the one you’re actually getting.

Home Inspection

Buyers typically include a contingency within a purchase agreement to have a home inspection conducted on the property in question, which they are usually given about a week or two to complete from the time of offer acceptance. The exact amount of time they have to do this can be negotiated in the offer.

It’s recommended that sellers have property inspections down before an offer is on the table, which can help avoid any unpleasant surprises that may be uncovered during a buyer-appointed inspection.

If anything is discovered that requires attention, you can request to have certain repairs made within the inspection period. However, it should noted that sellers are under no obligation to make these repairs. It’s simply something that can be negotiated within the escrow period. Ideally, an agreement will be reached between both parties that will allow the deal to go through, whether the seller agrees to make these repairs or not.

Remove Contingencies

If everything checks out, the contingencies can be removed from the contract. However, if something creeps up during escrow that is backed up by a contingency, you have a legal right to bail out of the deal without any financial consequences. A list of recommended contingencies to include in a purchase agreement include:

  • Financing
  • Home inspection
  • Title search
  • HOA document review
  • Appraisal

The moment that each contingency is either fulfilled or expires, they should be actively removed from the agreement and signed by both parties.

Final Walk-Through

Within five days of the close of escrow, you can do a final walk-through of the home to make sure it is still in the same condition as when you agreed to put an offer on it and confirm that all agreed-upon repairs are made.

Close Escrow

At this point, you will receive confirmation that the deed is recorded and title is transferred. The seller gets your deposit money, and you will be funded by your lender with the money needed to cover the purchase. The seller will then get a final settlement statement from escrow that details all associated selling costs which are deducted from the purchase price.

The Bottom Line

The escrow process might seem like a long one, and it can be. Typically, the more contingencies in an offer, the more involved escrow will be. Escrow is often the intimidating part of buying and selling, but your real estate agent can help you navigate this otherwise complex process to successfully get you from offer acceptance to closing escrow.