“Everything You Need to Know About Escrow”

If you’re buying or selling a home, you’ve probably heard the word “escrow” — and maybe wondered what it actually means. It’s one of those real estate terms that gets tossed around a lot, but understanding it is essential to feeling confident during the homebuying process.

In simple terms, escrow is the neutral middle ground that protects both buyers and sellers during a real estate transaction. Let’s break it down so you know exactly what to expect.

1. What Is Escrow?

Escrow is a financial arrangement where a neutral third party — often called an escrow company or escrow officer — holds money and important documents until all conditions of a sale are met.

In a real estate transaction, escrow ensures that:

• The buyer’s deposit (earnest money) is safely held until the deal closes.

• The seller receives payment only after all terms of the agreement are fulfilled.

• Both parties are protected if something goes wrong.

In short: escrow keeps everyone honest and the transaction secure.

2. When Does Escrow Begin and End?

Escrow begins when the buyer and seller sign a purchase agreement and the buyer submits earnest money (a good-faith deposit).

From there, the escrow company or agent manages the process until closing, which usually includes:

• Confirming the title is clear

• Coordinating the appraisal and inspection

• Managing loan documents and signatures

• Handling funds on closing day

Once both sides complete their obligations — and all paperwork and payments are verified — escrow “closes”, meaning ownership officially transfers to the buyer.

3. What Happens During Escrow for Buyers?

During escrow, buyers typically:

• Deposit their earnest money into escrow

• Schedule home inspections and appraisals

• Finalize loan approval

• Review closing documents

It’s also when the buyer can request repairs or renegotiate terms if issues are discovered. Your agent and lender will coordinate most of these steps for you, but staying responsive and organized helps everything run smoothly.

4. What Happens During Escrow for Sellers?

For sellers, escrow means:

• Providing required disclosures and documents

• Cooperating with inspections and appraisals

• Handling agreed-upon repairs, if any

• Reviewing final settlement statements before closing

Once the buyer’s funds are verified and all paperwork is signed, the seller receives the proceeds — and the transaction officially closes.

5. What Is an “Escrow Account” After Closing?

Escrow doesn’t always end at closing. Many homeowners continue to have an escrow account as part of their mortgage.

This account is managed by your lender and used to pay ongoing costs like:

• Property taxes

• Homeowners insurance

Each month, a portion of your mortgage payment goes into this account, ensuring your bills are paid on time automatically — no need to track multiple due dates.

6. Why Escrow Matters

Escrow protects both sides:

• Buyers know their deposit won’t disappear if the seller backs out.

• Sellers know they won’t transfer the property until they’re paid in full.

It adds security and structure to a complex transaction — helping prevent misunderstandings, fraud, or missed steps along the way.

💡 Final Thought

Escrow might sound complicated, but it’s really about trust and protection. It ensures every condition of your real estate transaction is met before money and ownership change hands.

With a reliable escrow officer and an experienced realtor guiding you, the process runs smoothly — giving you confidence from offer to closing.