Escrow

What Is Escrow in Real Estate?
Escrow is a legal and financial arrangement where a neutral third party (escrow agent or company) holds funds and important documents during a real estate transaction until all conditions of the sale are met. This ensures that neither the buyer nor the seller is at risk if the other party fails to fulfill their obligations. 
How the Escrow Process Works
Opening Escrow
After the seller accepts an offer, an escrow account is opened by a title company or escrow officer. 
Deposits & Documentation
Buyer deposits earnest money (a good-faith deposit) into the escrow account.
Escrow agent collects signed purchase agreements, disclosures, and inspection reports. 
Condition Checks
Escrow ensures all contingencies—like home inspection, appraisal, and loan approval—are satisfied before closing. 
Closing Escrow
Once conditions are met:
Escrow officer disburses funds to the seller.
Records the title transfer.
Buyer receives ownership of the property. 
Costs & Responsibilities
Escrow Fees: Typically 1%–2% of the home’s purchase price, split between buyer and seller depending on local customs.
Earnest Money: Held in escrow until closing; applied to down payment if the deal closes. 
Security & Fraud Prevention
Your files emphasize wire fraud risks during escrow. Key precautions include:
Never trust wiring instructions sent via email.
Always verify instructions by calling the escrow agent using a trusted phone number from the company website.
Summary
Escrow is a neutral safeguard in real estate transactions, protecting both parties by holding funds and documents until all contractual conditions are met. It covers earnest money, title transfer, and sometimes ongoing payments for taxes and insurance. Security is critical—always verify wiring instructions by phone.
Escrow Checklist for Buyers
Open Escrow
Confirm the escrow company and agent details.
Deposit earnest money into the escrow account. [rocketmortgage.com]
Review Purchase Agreement
Ensure all terms and contingencies are clearly stated.
Verify timelines for inspections, appraisals, and financing.
Complete Inspections
Schedule home inspection and review the report.
Request repairs or negotiate credits if needed.
Secure Financing
Finalize mortgage approval.
Provide lender-required documents promptly.
Verify Title & Insurance
Review preliminary title report.
Obtain homeowner’s insurance and provide proof to escrow.
Check Closing Disclosure
Review all costs and confirm accuracy.
Ensure funds for closing are ready.
Wire Funds Safely
Always verify wiring instructions by phone using a trusted number (never rely on email). 
Final Walkthrough
Inspect property condition before closing.
Sign Closing Documents
Complete signing with escrow officer or notary.
Confirm recording of title transfer.
Escrow Checklist for Sellers
Open Escrow
Provide signed purchase agreement to escrow.
Submit required disclosures and property information.
Respond to Buyer Requests
Address inspection findings.
Negotiate repairs or credits.
Clear Title Issues
Resolve any liens or encumbrances.
Provide payoff information for existing loans.
Prepare Closing Documents
Review settlement statement.
Confirm payoff amounts and net proceeds.
Coordinate Move-Out
Ensure property is in agreed condition.
Remove personal belongings before final walkthrough.
Sign Closing Documents
Complete signing and confirm funds disbursement.
Security Reminder
Both parties should verify all financial instructions by phone to prevent wire fraud. Never trust emailed wiring instructions without confirmation.