Frequently Aksed Questions

What is an escrow?
  • An escrow is: an arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party receives and disburses money and/or documents for the transacting parties, with the timing of such disbursement by the third party dependent on the fulfillment of contractually-agreed conditions by the transacting parties, or
  • an account established by a broker, under the provisions of license law, for the purpose of holding funds on behalf of the broker’s principal or some other person until the consummation or termination of a transaction;or,
  • a trust account held in the borrower’s name to pay obligations such as property taxes and insurance premiums.

The word derives from the Old French word escroue, meaning a scrap of paper or a roll of parchment; this indicated the deed that a third party held until a transaction was completed.

How Does Escrow Work?

A typical escrow involves five primary parties: a buyer, seller, lender, borrower and escrow officer.

During the escrow process, the escrow officer will carry out instructions dictated by the parties. These steps can include any of the following and are unique to each home:

  • Order title search
  • Request demands and/or beneficiary statements
  • Accept structural pest control report and other reports
  • Accept new loan instructions and documents
  • Accept fire insurance policies and complete settlement
  • Request closing funds
  • Audit file in preparation for closing
  • Order recording
What Should I Look for in an Escrow Partner?

With the hundreds of options out there, picking a valuable escrow partner can make the difference between a smooth contract or a delayed process costing you and your client thousands.

It’s critical that you research potential escrow partners with criteria in mind. Here is what we recommend you judge your potential escrow partner on:

Independent Status

The best escrow partner is someone who can serve as a completely neutral third party, with no ties to real estate companies or mortgage firms that might influence their actions. You should always ask more questions about “in house escrow” or shared ownership arrangements.

The California Department of Business Oversight can verify if an escrow agent is truly independent (meaning the individual and his or her company has “met and satisfied all of the licensing requirements” set forth by California escrow law).

The Right Experience and Resources

At the very least, you want an escrow partner who has substantial experience in this field. It is recommended that you make a quick call to review experience and make sure there is a good personality fit with your escrow team.

Beyond that, it’s important to learn about their distinctive value proposition and whether they have the resources to meet your specific needs. The most qualified escrow partner will use technology to make things easier for you, including:

  • E-Signatures – Sending documents to you via email with the option of using a digital signature.
  • Digital Storage – Using a paperless system for quick and easy access to information in your file.
  • Security & Cloud Technology – Servers and files stored in the cloud and monitored around the clock by a qualified data security provider.
  • If Cost is Important, Compare – Any escrow partner worth checking out will be happy to provide an estimate of the costs involved in selling your house, including title insurance, escrow services, etc., so there are no surprises down the road.
How Long Does Escrow Last?

On average, escrow lasts between 30 – 45 days. This is dependent on many factors, but most importantly the swift collection of critical documents and timely processing from all parties involved (e.g. buyer, seller, real estate agent, loan officer, etc.)

Do I Have a Choice in an Escrow Company?

Yes! Choosing an escrow officer is much like choosing your real estate agent. Get several referrals from trusted sources and then compare services, cost and convenience.

I Am Ready to Start Escrow, What Happens Now?

Escrow begins when a seller accepts a buyer’s offer and an escrow agent or company is selected. It’s important the escrow officer educates the real estate agent and clients on important steps during escrow—especially steps that require client involvement and time.

Those Steps include:


Request for Documents. Working together with the real estate agent, the escrow holder compiles a set of joint escrow instructions. These documents outline how funds held in escrow should be disbursed. Both parties must sign the documents before moving forward.

“Good Faith” Deposit. The buyer places a “good faith” deposit (typically one to three percent of the purchase price of the house) into the escrow trust account.

The Loan-Approval Process. Since approval of a bank loan is the most time-consuming element in the process, buyers are advised to fill out a loan application as soon as possible. This includes supplying the lender (a bank or mortgage company) with key financial information (bank statements, tax returns, paycheck stubs, etc.).

Seller’s Disclosure. According to law, the seller is obliged to disclose any known problems with the house. This often takes the form of an extensive property questionnaire to be filled out by the seller early in the escrow process.

Title Search. The escrow holder requests a Preliminary Title Search to be made of public records (deeds, mortgages, paving assessments, liens, wills, divorce settlements, etc.). This will establish whether there are any existing claims to the property (other than the present owner’s). The escrow holder then prepares a preliminary title report for review by all parties. Any problems must be resolved before the process can continue.

Property Appraisal. The lender schedules an appraisal of the property to assess its physical condition and address any defects or issues. This may include a pest inspection. The goal is to assure both buyer and lender that the house is in order and there are no threats (such as termites) to its structural integrity. The cost of repairs is negotiated between buyer and seller or may be deducted from the purchase price of the house.

Documents Prepared for Signatures. Once the seller’s loan application is approved, the required documents are sent to the escrow company. The escrow agent also prepares other key documents, such as a settlement statement, warranty deed and any documentation required by the IRS.


How Can I Improve my Escrow Experience?

Contact us today to meet with an escrow officer and learn about some of our unique offerings:

  • VentureTrac – our proprietary mobile app that speeds up escrow
  • Errors & Omissions Policy for Sellers – six month protection for sellers for every escrow opened with New Venture Escrow


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