What You NEED to Know About the Escrow Process

Let’s Breakdown the Escrow Process:

Today we will going over the escrow process for the state of California. This also applies to other escrow states that also have a neutral third party (holds the paperwork from the seller and the money from the buyer in order to facilitate the transaction). So if you came from a state like my home state of Pennsylvania or New York or Florida, those are all settlement states where they have closings that are settlements. You may actually have everybody at one table and have the buyer, the seller, their agents, and their attorneys. Here in an escrow state, we allow a neutral third party to hold the paperwork and the money. And for the most part, unless there’s some disagreement, it’s the agents on both sides and the clients on both sides that will work together, and a lot of times never even see each other before the transaction is done.

So what I’ve put together here is a little flow chart (see at the bottom). I know it’s a bit of an eye chart for those of you who aren’t Analytics, but hopefully this will still make a little bit of sense and you can refer back to it. So we’re going to go over the flow chart that I have listed here so that you can see which boxes, which are different people in the transaction, provide paperwork or receive paperwork. I’m going to have all of this up on my blog posts that you’ll be able to look at it and more clearly see who provides paperwork to whom and what has to be done to it. But this is just an overview so that you get a better idea. So here’s a flow chart and on this flowchart we’re going to talk about these different arrows, which are things that are given to or received from different sides of the transaction.

The very first one of course is a buyer’s agent will send over to the seller side an offer that will then get signed and accepted. That’s that blue arrow coming back. And the buyer’s agent will send to the lender the fully executed agreement. And the lender will then request to the buyer additional documentation if they don’t already have it. You’re going to hire a home inspector or other vendors like maybe a roof inspector or maybe there’s even a well certification or a septic certification. And then in the meantime, the seller’s side is going to send the signed purchase agreement to escrow to open escrow, and escrow is going to send to both parties, request for statement of identification. They’re going to ask the seller side for a grant deed and any loans that they have so that they can get pay off amounts.

And for the buyer’s side, they’re going to also ask for that statement of identification, send the escrow instructions, but they’re also going to ask for questions like who is the lender? And then the next step is that escrow is going to ask the lender for information to get the payoffs to get the total amounts for the disclosures, the closing disclosures that you get fairly early on in the transaction now. And on the flip side, the lender needs to provide to escrow their list of fees or any additional services that they are providing. And if there’s an HOA, the escrow has to request a demand, and the escrow company needs to send back the escrow documents so that they can be sent out to the buyer’s side. Escrow is also going to contact those lien holders for the seller. So if the seller has a first or maybe even a second mortgage, they’re going to send out a request for the payoff amount.

They’re going to receive the pay off amount back and that date for the pay off amount or a prorated day per diem. And then at the very end, when the lender is sending the money in so that the buyer side’s going to send in the balance of their down payment, the seller will have sent in their grant deed and the lender will have sent in the balance of money if the buyer is using a loan. And all of those documents and that money will go to title, and then the title company will take it to the county recorded to be recorded.

It will come back to Title who will then come back to escrow and issue the happy news that you have a confirmed record of the deed, at which point there’ll be one last set of paperwork for all the signed disclosures that will come to both sides. Plus the seller side will typically be doing the home warranty and they’ll also be letting the buyer’s agent know where to get the keys. So this is just a quick overview. You’ll be able to look on our blog and see all of the details of paperwork and other services that are provided and who provides what to whom. Hope that makes sense. Look forward to talking to you some more. Have any questions? Give me a call.

​