Escrow Process for Sellers

The period known as “escrow” is often shrouded in mystery for many property sellers. This phase begins once the real estate purchase contract is signed and continues until the closing day. While it may seem like a time to simply sit back and wait for the transaction to finalize, there are crucial responsibilities and actions for sellers to be aware of during escrow. Understanding the steps of the escrow process for sellers can help ensure a smooth and successful closing.

Roles in Escrow

Escrow Agent’s Role: The escrow or title agent will order a title report, prepare the property deed, and handle other necessary paperwork.


Buyer’s Mortgage Lender: If the buyer is getting a loan, their lender will review the loan details and order a professional appraisal of your home.


Homebuyer’s Tasks: The buyer will arrange for pest and general inspections, obtain homeowners’ insurance, and work on any other contract contingencies.


Your Responsibilities:

Home Access: Make your home available for inspections and appraisals.
Prepare Documents: Complete necessary forms and statements, such as property condition disclosures and other required local documents.
Meet Contingencies: Fulfill any contract obligations, like providing permits for recent renovations, within the agreed timeframe.

Escrow Opens

Within three days of accepting the offer, the buyer will wire a 3% deposit into our escrow account. This deposit is refundable until the contingencies are lifted. After that, if the buyer cancels escrow, they will forfeit the deposit to you. The Realtor contacts the title company to handle the transaction, officially opening escrow.

In the next few days, you will receive a package from escrow with instructions. This package will provide an overview of the escrow terms and contain reports and forms for your review and completion. Please read everything carefully and contact your agent with any questions.

Home inspections and appraisals

The buyer will typically arrange for a home inspection and appraisal during escrow. As the seller, you might need to make the property accessible for these professionals. In some cases, the inspection may reveal issues that need addressing, which could involve negotiating repairs or price adjustments with the buyer.

Buyer Inspections: Depending on the contract terms, the buyer has 0-17 days to complete a general home inspection and any other specific inspections, such as for the chimney, sewer line, and pool. These inspections usually take 2-4 hours depending on the house size and may require at least one or two days. Typically, the seller is not present. After the inspections, the buyer may request the seller to address any uncovered issues. This is common, and usually, both parties reach an agreement on the repairs.

More likely, the buyer will negotiate over any needed repairs. You have several options: agree to the buyer’s requests for a reduced price, offer to pay for the repairs outright, suggest minor adjustments to their requests, insist on a second opinion from a trusted contractor, or refuse some requests and see how the buyer responds. If the buyer is genuinely interested in your home, you should be able to reach a compromise. However, be cautious—playing hardball in these negotiations could cause the deal to collapse over a relatively minor amount.

During the the 17-day period, the buyer’s lender will conduct an appraisal. Sellers should keep the home in “show-ready” condition for this appraisal. If the home doesn’t appraise at the purchase price, the seller’s Realtor will discuss available options at that time.

Addressing contingencies

Purchase contracts often include contingencies that must be resolved before closing. Common contingencies include financing approval, home inspection results, and the sale of the buyer’s current home. Sellers must cooperate with the buyer and their agents to ensure these conditions are met.

Once the buyer has reviewed all disclosures and reports, seen the inspection results, and received the seller’s response to their repair requests, they will release all contingencies in writing (except for the loan contingency).

This is a significant milestone. Sellers can take comfort in knowing they are nearing the “home stretch” of escrow. The only remaining step is for the buyer’s lender to provide final loan approval.

Buyer Receives Final Loan Approval – Removal of Loan Contingency

This is a significant day, usually on day 17 or day 21 of escrow as per the contract.

Once the buyer removes their final loan contingency in writing, escrow enters the final phase. If all buyer’s contingencies are released and the buyer backs out of escrow afterward, the seller keeps the earnest money deposit as compensation.

Buyers rarely back out of escrow at this stage because losing money is not something they want. It’s uncommon for escrow to fail from this point onward, hence the term “the home stretch.”

Begin repairs

Once the Listing Agent confirms that all of the Buyer’s contingencies have been removed in writing, Sellers can begin any agreed-upon repairs. Keep records of all repair receipts and provide copies to the Listing Agent as proof that the repairs are finished.

It’s crucial not to start repairs until all Buyer contingencies are removed because repairs can be costly for Sellers. If the Buyer backs out of escrow after removing their contingencies, the Seller can keep the Buyer’s full earnest deposit, which helps cover the costs of repairs.

Title and Escrow Services

A few days before the close of escrow, you (Seller) will visit the title company to sign all the necessary paperwork required for the finalization of the escrow process. This step is crucial in preparing for the closing of escrow. The Seller will coordinate directly with the escrow officer to schedule this appointment.

The escrow officer is willing to accommodate any special needs the Seller may have, especially if the Seller cannot sign during regular business hours. However, it’s essential to note that requesting special accommodations such as after-hours signings, weekend appointments, or out-of-town signings will require a notary, incurring an additional fee.

When going to the title company to sign the papers, the Seller must have their bank wiring information ready. This information ensures that the Seller can receive the net proceeds via wire transfer promptly after the close of escrow. It’s important to be cautious of wire scams to protect your money during this process.

Final Walk-Through

The buyer will conduct a final walk-through of the property within two to five days before the planned closing date. This enables the buyer to confirm that the property is in a similar condition to when escrow began and that the seller has completed any agreed-upon repairs. Sellers frequently join the walk-through to provide buyers with extra details about the property, including operating appliances and the vendors used on-site.

Failing to fulfill your obligations could lead the buyer to delay the closing, raise new repair or price requests (potentially receiving a last-minute credit in escrow to address issues), or even cancel the sale altogether.

Last Few Days

As per the standard contract, Sellers must leave the property completely by the agreed-upon time on the close of escrow date.

Make sure to remove all personal items and trash. Unless specified otherwise in the contract, do not take anything attached to the property that would require tools to remove—it stays.

While professional cleaning isn’t mandatory (unless agreed upon), Sellers should leave the home vacuumed and wiped down. Professional cleaning is recommended for convenience.

Before leaving, Sellers should consult their Agent about where to leave keys, garage door openers, mailbox keys, neighborhood gate openers, etc., upon final departure.

On closing day, sellers will need to sign the final documents, such as the deed and closing statement. It’s also the day to hand over keys, garage door openers, and any other property-related items to the new owners.

Escrow closes

The escrow process concludes when the County records the property under the new homeowner’s name. Your Agent will inform you once this is official, typically occurring in the late afternoon on the close of escrow date.

The seller will receive the net proceeds from the sale on the following business day after closing escrow.

While escrow might seem like a waiting game, it’s a critical period that involves several key actions to ensure a successful and timely closing. By staying proactive and responsive, sellers can navigate escrow smoothly and move forward to the next chapter of their lives.