Escrow Made Easy

You’ve done your homework. You’re pre-approved, You’ve made an offer that is accepted and now you’re in escrow!  What is Escrow?  And how can you make the process smooth.  Commonly, it is the period of time after Buyer and Seller agree on terms and conditions(a ratified offer),  until the time that you actually own the property (Deed is Recorded with the county Recorder).  In Northern California, most escrows are handled by the Escrow department of a Title Company.  This is different than Southern California where they are usually two separate companies.

More activity in escrow is from the Buyers.  The Buyer is the one who has conditions to be removed. 

The first thing that goes to escrow is the Buyers earnest money check.  Customarily  3% of the purchase price accompanies an offer, sometimes  a lesser initial amount with an increased to 3% called for during escrow).  Although in this current highly competitive marketplace, we are finding less contingencies, most offers have some.  The majority of the real estate transactions still have loan conditions, although if you are pre-approved then all you need is to get the appraisal of the property. 

The next step is to order and or review existing inspections and disclosures so  you can wind up any  lose ends that you need to complete the transaction. Have follow up inspections (i.e.: A Home inspector might recommend having a heating contractor look at a furnace that doesn’t appear to be working correctly).

One thing that has probably held up more escrow closing dates than most conditions others is the Buyers Homeowner Insurance being in place.  It seems like a minor item,  however lenders have a huge investment in the property and they will not fund the loan or close escrow until there is insurance in place to protect them, as well as you.  The Buyer must arrange the coverage they want along with the requirements the lender demands to make the loan.

The Sellers do have some matters to address during escrow.  They need to make sure their property title is free of unexpected liens or encumbrances, and clear up any issues if they exist.  They  need to work with the escrow officer to order the loan payoff(s) ordered.  Sellers also need to  repair and/or correct any defects specified or agreed to prior to close of escrow (like having the home tented for termites or having the local fire department test the smoke alarms for location and function).  Schedule movers and/or final clean up of the property prior to the closing date.

Unlike other parts of the country, in Northern California the Close of Escrow is a usually bit anti-climatic.  Most closing documents are  signed 2 days to 2 week prior to the actual close.  If the Buyer is not taking possession that day - it really feels anti-climatic. Closing documents are usually signed individually, i.e.  the buyer and/or their agent and/or their lender meet with their escrow officer separately form the sellers and/or the Sellers Agent to sign their papers.  Unlike other parts of the country, it is the exception, rather than the rule where attorneys are present at the closing.

Like most other areas in the process of  completing a property sale, the more pre-planning you do, the smoother the process including escrow.