Escrow Information for Inexperienced Home Buyers

All About Escrow for BuyersThe escrow period is a normal part of the home buying process, but to many home buyers, the concept of escrow is confusing. Knowing what escrow is, what your responsibilities are and what to expect throughout the process can help make buying a home a little less stressful.

What Is Escrow?

An escrow service is a neutral third-party business that tracks the various documents and financial exchanges between a home buyer and the seller. The escrow service ensures that all documents are all collected and properly filled out, and that both parties are meeting their obligations. Escrow holds onto the deposit, called "earnest money," that the home buyer puts down after a contract has been signed by the seller.

"Escrow" is also the name for the period of time that occurs after an offer is accepted and before the home has finally sold. During the escrow period, the home buyer and home seller both have responsibilities to help the sale of the home move forward.

What Happens During Escrow?

There are many moving parts at play during the escrow period. The role of the buyer and the role of the seller are very different during this time. As a buyer, it helps to know your responsibilities and what the seller is doing to prepare the property for the sale.

Buyer Escrow Experience

For the buyer, escrow is a whirlwind of activity. During this period of time, the buyer will go through a series of steps to finalize the sale of the house. A buyer's major goals during the escrow period include:

  • Get an appraisal
  • Find homeowner's insurance
  • Finalize mortgage papers
  • Get an inspection

All of these things must happen on the timeline established by the purchase contract.


The appraisal is typically required by the mortgage lender. If the house doesn't appraise at a price equal or above the purchase price of the home, the buyer may need to put down more money to purchase the property, or the seller may need to reduce the price of the Alexandria South home. Either way, a renegotiation may need to take place.

Home Inspection

Home inspections can reveal problems that lead to a complete renegotiation of the contract, depending on what is wrong with the home. Buyers must remember that no home is perfect and that it's typical for an inspection of a previously lived in property to reveal problems. A good real estate agent can help negotiate repairs or a reduced price for the home based on the findings of the inspection.


Homeowner's insurance is a requirement for buyers borrowing money to purchase a home. Choosing the right insurance policy can be difficult. Homebuyers hoping to save money on their homeowner's insurance can do so by shopping around, combining car and homeowners insurance and selecting a higher deductible.


The mortgage lender will require paperwork to finalize the loan on time. Buyers must work closely with their lenders throughout this period to ensure that the loan will fund at the end of the escrow period.

What Happens on the Seller's Side?

The escrow experience for sellers is relatively calm. Sellers must make their home available for inspection and appraisal. There may be times during the escrow period when the seller must make tough decisions or take quick action. For example, if the inspection reveals serious problems with the home, the seller may need to scramble to make repairs or renegotiate the price of the home.

If the home is occupied, it must be emptied before the final inspection. Sellers spend a lot of the escrow period packing and clearing clutter from the property. The home seller must also maintain the property throughout the escrow period, to keep the home in the condition stated in the purchase agreement.

A title search conducted on the house may turn up a lien on the property. If this happens, the seller must act quickly to settle the bill or provide proof of payment.

When Does Escrow End?

Escrow ends when the sale of the house is finalized or when the sale is canceled. At the end of the escrow period, mortgage documents are signed and the house is inspected one final time. The house must be emptied before the final inspection, and Sellers must take care to ensure that the house is in the condition specified in the purchase agreement. If the home is not in the condition specified by the purchase agreement, the buyer could cancel the deal.

Working with your real estate agent throughout the escrow period can help ensure that the escrow period will go well. To find out more about the escrow period and your role while in escrow, talk to an experienced real estate agent. He or she can answer your questions and help you navigate the complicated waters of the home sale process.

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