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The Close of Escrow: Process & Fees to Expect

When people exchange hundreds of thousands of dollars in real estate transactions, there are bound to be some fears about the whole process. For instance, how can you be sure the buyer has enough money to buy your home?

You can’t always take someone’s word for it. That’s why the escrow closing process is an important aspect of buying or selling a home. It’s an independent third party that holds the money and documents for the buyer and seller.

When Does Escrow Close?

Escrow officially closes when the funds are dispersed to the seller and the title of the home is in the buyers’ name. It’s pretty much the last step in the home selling/purchasing process. But how much will it cost and who pays the escrow fees?

Here is an overview of the process from our what is escrow resource, which goes over every single part of the escrow closing process in detail!


Now, let’s go through the escrow closing process and then answer some basic questions about escrow afterwards!

  1. Show Up to the Closing

Closing on a home and escrow closing are very much intertwined. Close of escrow usually happens on closing day, as it is when everything is finalized. Documents are signed and money is dispersed.

  1. Sign Escrow Closing Documents

It’s not a closing unless there’s a mountain of important paperwork to sign! There will be many documents to sign, but here’s a list of just a few you might see on closing day:

Initial Escrow Disclosure: This disclosure breaks down the distribution of money out of the escrow account itself. It shows in detail what all funds will be attributed to.

Deed of Trust: If you the buyer doesn’t pay for the home, the home goes away. That’s essentially what this document states. This contract allows the lender or bank to foreclose on the property if the buyer doesn’t meet the agreed-upon terms of the mortgage.

Promissory Note: This acknowledges the buyers’ commitment to pay your loan for the home mortgage. It will provide in-depth details of interest rate and month payment requirements.

Other paperwork to watch out for can include but is not limited to:

An occupancy statement

Seller concessions

Appraisal acknowledgment

Truth-in-lending disclosure.

Transfer Home Ownership to Buyer

After signing all of the important documents for the close of escrow and home closing, the ownership of the house goes from the seller to the buyer.

  1. Send the Deed to County Recorder

Now that the deed is officially in the buyers’ name, it is important that the document goes to the county recorder. Your title company or escrow company will do this for you.

  1. Cash Your Check

Now everyone gets paid! This means that the buyer wires money for the rest of the down payment money and other fees (ex: closing costs) to escrow and escrow distributes the funds to the seller.

The earnest money that the buyer deposited in the beginning is included in the funds. If the buyer is not paying in full, then the company lending the buyer a loan (ex: bank) will send the funds to escrow and escrow will distribute the money to the seller. As you can see, money is not exchanged directly, escrow is a middleman that handles it all.

At this point, the seller, the real estate agents, the escrow company and/or title company, attorney and others get paid. Taxes, fees, and liens will also be paid for when all the money is sent out.

And that’s it! Since everyone has signed all the documents and the money is disbursed, they can close escrow.

Now let’s look at some common escrow closing questions you may have!

What are Escrow Fees?

Escrow fees are part of the closing costs and go directly to the escrow company or title company. It’s the cost of using their service to hold and disperse funds.

Who Pays Escrow Fees at Closing?

Usually, the escrow fees are split 50/50 between the buyer and seller, as they are both using and benefiting from the escrow service.

But this isn’t always the case!

Sometimes the seller picks up the escrow fee tab or the home buyer may. It depends on what was negotiated during the offer phase. The details are outlined in the final agreement. Check out this article on how escrow fees are split between buyers and sellers!

What Do Escrow Fees Cost?

The cost of escrow fees can vary from state to state and can also depend on the price of the home. Generally, however, they are about 1-2 percent of the home price.

At New Venture Escrow the escrow fee includes a base/standard pay of $350 plus $1.75 per thousand on the total home purchase.

Here is an example of what that would look like:


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