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The Escrow Process Explained
Learn how escrow works, what to expect during the process, and how it protects both buyers and sellers.
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Escrow is a legal arrangement in which a neutral third party temporarily holds money or property until a particular condition has been met—typically the fulfillment of a purchase agreement.
During a real estate transaction, escrow provides security for both buyers and sellers. It ensures that no funds or property change hands until all terms of the agreement have been satisfied.
The escrow process typically follows these steps:
1. Opening Escrow: An escrow account is opened, and the purchase agreement is deposited.
2. Deposit of Earnest Money: The buyer deposits earnest money into the escrow account.
3. Due Diligence Period: Inspections, appraisals, and title searches are conducted.
4. Loan Processing: The buyer's lender processes the loan application.
5. Final Walkthrough: The buyer inspects the property one final time.
6. Closing: Once all conditions are met, funds are disbursed and documents are recorded.
Throughout this process, the escrow officer acts as a neutral party, ensuring that all parties fulfill their obligations before the transaction is completed.
Frequently Asked Questions
Who chooses the escrow officer?
Typically, this is negotiated in the purchase contract. Often the seller's agent or buyer's agent will recommend a trusted company.
When do I get my keys?
Once the transaction has funded and the deed has been recorded with the county, you'll receive the keys to your new home.