Starting the Escrow Process: What to Expect

Starting the Escrow Process: What to Expect



What should you expect when starting the escrow process?  Real Estate Transactions in California usually involve the use of an escrow agent (also called an escrow holder). This individual is a representative of a completely neutral third-party who will act as a distributor and coordinator during the entire real estate transaction.

The escrow process includes all activity from the moment a seller accepts a buyer’s purchase offer and the day the buyer moves in.  The process may lasts anywhere from one to two months from “open” to “close.”

So what should a buyer and seller expect when starting escrow? Here we’ll outline what happens at the very beginning and offer tips as to how you can make the process go smoothly.

Due Diligence in Finding an Escrow Partner

For the fastest, easiest escrow process, it is wise to look into the benefits of different companies.  The escrow company will deposit the initial good faith money and retain any deed or other related legal and financial items.  Funds will be deposited in a (and non-interest paying) trust account. This will ensure the seller doesn’t receive any money from the sale of the house until the transfer is made to the buyer, and also act as proof of the buyer’s earnest commitment to purchase the property.

The seller may rely on the real estate agent to recommend an escrow service provider. However, it is a point of negotiation between buyer and seller as a term of the Residential Purchase Agreement, and buyers can also fight for a different provider. It is often helpful for buyers and sellers to do some research on their own.

Questions to Ask

  • How experienced is the escrow provider?
  • Can they provide customer testimonials?
  • Are they conveniently located?
  • Can the seller access information kept by the escrow company (for example, is this information stored in the cloud)?
  • How do their fees compare with others in the field?
  • Is the escrow company is truly independent and has no affiliation with a real estate company?

Starting The Escrow Process

Upon acceptance of the purchase offer, an escrow company will be selected.  The real estate agent is to send the fully executed purchase agreement to the escrow agent and  the buyer will wire or send a check for the initial good faith deposit to the escrow company’s trust account (usually representing 1-3% of the purchase price).

The escrow holder will prepare escrow instructions for review and signature by both the buyer and seller. These escrow instructions are supplemental instructions to the Residential Purchase Agreement.

These joint escrow instructions and agreement specify how the funds held in escrow should be disbursed. They also address agreements between both parties that pertain to any monies being transferred from one party to another.

The escrow officer is responsible for coordination between multiple parties (agents, lenders, vendors, insurance) to create the proper escrow documentation to be agreed upon by both buyer and seller.

A Complex Undertaking

The escrow agent’s duties span a wide array of tasks critical to a successful real estate transaction. In addition to holding onto the purchase funds, the agent:

  • Keeps the flow of documents to all parties moving smoothly
  • Updates all parties throughout the process on the escrow status
  • Orders title insurance and secures issuance of title insurance policy
  • Obtains approvals, reports, and documents as needed
  • Prepare deed and loan documents
  • Distributes funds for real estate commissions, recording fees, title insurance, loan payoffs, etc.

Escrow can be an emotionally labor intensive experience, which is why it is so important to choose the right escrow partner.  New Venture Escrow promises the fastest, easiest and most transparent escrow possible and offers innovative technology and exclusive products to make this a reality.


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