Escrow Made Easy For Buyers

You’ve done your homework. You’re pre-approved. Your offer has been 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 the Buyer and Seller agree on terms and conditions (a ratified offer), until the time that you actually own the property. 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 Buyer’s side. The Buyer is the one who has conditions to be removed. The first thing that goes to escrow is the Buyer’s earnest money deposit. Customarily 3% of the purchase price accompanies an offer (sometimes a lesser initial amount with an increase to 3% called for during escrow). Although, in this current highly competitive market, we are finding fewer contingencies. The majority of real estate transactions still have loan conditions, although if you are pre-approved, 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 loose ends that you need to complete the transaction. Schedule follow up inspections to double check that things are working as they should. One thing that has probably held up more escrow closing dates than most other conditions is having the Buyer’s Homeowner Insurance 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.

Unlike other parts of the country, in Northern California the close of escrow is usually a bit anti-climactic. Most closing documents are signed 2 days to 2 weeks prior to the actual close. If the Buyer is not taking possession that day, it really feels anti-climactic. Closing documents are usually signed individually, i.e., the buyer, and/or the Agent, and/or the Lender meet with their escrow officer separately from the sellers and/or the Seller’s Agent to sign their papers. Attorneys can also be present at the closing if the Buyer/Seller insist. Like most other areas in the process of completing a property sale, the more pre-planning you do, the smoother the process is – including escrow.

For more information about Title and Escrow, visit the link below and download the Orange Coast Title Buyer & Seller Guide.

OCT Buyer and Seller Guide