If you're buying or selling a home for the first time, you've probably heard the word "escrow." But what exactly does it mean?
Let's walk through what happens during escrow so you know what to expect.
Step 1. Your Offer Is Accepted
Congratulations! Once the seller accepts your offer, you're officially under contract.
The purchase agreement outlines important details, including:
- Purchase price
- Contingencies
- Closing date
- Earnest money deposit
- Items included in the sale
This is when the escrow process officially begins.
Step 2. Your Earnest Money Deposit Is Submitted
Shortly after your offer is accepted, you'll submit your earnest money deposit.
This deposit shows the seller you're serious about purchasing the home. The funds are safely held by the escrow company until closing and are typically applied toward your down payment or closing costs.
Step 3. Home Inspections Are Completed
Next comes one of the most important steps in the process: the home inspection.
A licensed home inspector will evaluate the property's condition and identify any potential concerns, such as:
- Roof issues
- Plumbing concerns
- Electrical systems
- HVAC performance
- Foundation issues
- Safety concerns
Depending on the results, buyers may negotiate repairs, request credits, or move forward with the purchase as agreed.
Step 4. The Appraisal Is Ordered
If you're financing the home, your lender will order an appraisal.
The appraiser's job is to determine the home's market value to ensure it supports the purchase price.
If the appraisal comes in at value, the transaction continues as planned.
If it comes in lower than expected, your Realtor will help guide you through the available options.
Step 5. Your Loan Moves Through Final Approval
During escrow, your lender works behind the scenes to finalize your mortgage.
They may request:
- Updated bank statements
- Pay stubs
- Employment verification
- Tax documents
- Additional financial information
One important tip:
Avoid making major financial changes during this time. Purchasing a vehicle, opening new credit cards, or changing jobs could impact your loan approval.
Step 6. Title Is Reviewed
The title company researches the property's ownership history to confirm there are no outstanding issues that could affect the sale.
They'll look for things like:
- Liens
- Ownership disputes
- Unpaid taxes
- Easements
Title insurance is then issued to help protect both the buyer and lender.
Step 7. Contingencies Are Removed
As inspections, financing, and other contract requirements are completed, contingencies are removed according to the purchase agreement.
Once all contingencies have been satisfied, the transaction moves one step closer to closing.
Step 8. Review Your Closing Disclosure
A few days before closing, your lender will provide a Closing Disclosure.
This document outlines:
- Your loan terms
- Interest rate
- Monthly payment
- Closing costs
- Cash needed to close
Review everything carefully and ask questions if anything is unclear.
Step 9. Final Walk Through
Shortly before closing, buyers complete a final walk through of the home.
This allows you to confirm:
- Agreed upon repairs have been completed.
- The home is in the expected condition.
- Included appliances remain with the property.
- Nothing has changed since your last visit.
Step 10. Closing Day!
The big day has arrived.
You'll sign the final paperwork, your lender will fund the loan, and once the transaction is officially recorded with the county, ownership transfers to you.
Congratulations, you're officially a homeowner!
Why Working With an Experienced Realtor Matters
While the escrow process may seem overwhelming, you don't have to navigate it alone.
At Taylor Thompson Home Group, we help our clients every step of the way by coordinating inspections, communicating with lenders, monitoring deadlines, answering questions, negotiating when needed, and making sure the transaction stays on track.
Our goal is to make buying or selling a home as smooth and stress free as possible.
Ready to Buy or Sell?
Whether you're preparing to purchase your first home or getting ready to sell, we're here to guide you through every step of the process.
👉 Start your home search today:
https://taylorthompsonhomegroup.com
We look forward to helping you confidently navigate your next move.