Closing on a new home is an exciting, yet nerve wracking, process. Real estate is a complicated undertaking and most people feel a little intimidated by all the steps and the chances for delays and mistakes. That is why you want to work with an experienced real estate agent and escrow company.

The escrow process may be complex, but it does not have to be overwhelming. There is an escrow journey that must be completed before you can ever consider a real estate purchase complete. There are many layers to the transaction and one of the major steps is the close of escrow.

In this article, you will learn what the close of escrow is, why it is important, and what the process includes. By the end, you should understand what is happening behind the scenes before you get the keys in hand. So let’s get started.


What is the Escrow Process?

Escrow is a common part of most real estate transactions. The escrow process introduces a neutral third-party — an “escrow agent” — that collects earnest money from the buyer.

The agent holds these funds, important documents and the property itself “in escrow” while the details of the deal are worked out. Once the seller and buyer agree on the terms of the sale, the transaction is completed and escrow is closed.


Defining Close of Escrow

The close of escrow means that all requirements have been met and that the funds and property are transferred. The seller is paid, and you can now take full possession of the property.

Close of escrow starts with the buyer making their earnest money deposit, which is a deposit made to the seller in good faith. It gives the buyer extra time to come up with funding. The money is placed into an escrow (or trust) where it is held jointly.

Escrow has another meaning as well: the process of purchasing property that utilizes an independent third party (escrow company) to hold all of the funds from the buyer. The escrow company then transfers it to the listing agent who then sends it to the seller.

There is one escrow officer who handles the transactions for purchasing a house and they are quite literally a middleman between buyer and seller. They work to make the buying and selling process run smoothly.


Close of Escrow vs Closing Date

Close of escrow and your closing date could be the same day if the seller is there for your closing. However, it could be a different day altogether.

The best way to think of this is that the close of escrow is the day that you and the seller fulfill your obligations to each other. If you provide your earnest money to the third party and the seller does the same with title documents and – unless the contract allows them to stay for a length of time – the keys, your responsibilities to each other are taken care of. Escrow is closed.

However, you could close on your mortgage and take possession of the title, deed and keys from the escrow agent on a completely separate day. This is your closing date and the seller does not have to be present. The entire close of escrow timeline usually takes 30 to 60 days. 


6 Steps to Reach the Close of Escrow


There are 6 steps to complete before you reach the close of escrow.

Step 1: Open Escrow With Buyer’s Good Faith Deposit

The buyer will provide a “good faith” deposit, also known as the earnest money deposit. This deposit essentially represents the buyer’s seriousness about completing the transaction. Your escrow agent will put this money into the escrow account. The good faith deposit is separate from the down payment. The good faith deposit sum will be a fixed sum or percentage-based.

Step 2: Perform Disclosure Signing

Next, the seller must complete a seller’s disclosure. This legal document outlines the full conditions of the property that they are selling. The seller will list all problems with the home or previous occurrences that could affect the buyer’s willingness to buy the property.

In many states the seller is obligated to provide truthful disclosure of anything relevant; otherwise, the buyer could renege on the contract at a later date without any legal repercussions or the seller could be on the hook for any major flaws that were not disclosed.


Step 3: Mandatory Inspections

After approving the Seller’s Disclosure, the next step in the close of escrow is the home inspection and appraisal. A home inspection is when a professional inspects the house in detail to find any damage and see if repairs are needed. The buyer can ask the seller to fix any issues that were uncovered.

Common inspections that may be necessary at this point in the close of escrow process could include:

  • Termite/pest inspection
  • Agent visual inspection
  • Lender appraisal inspection
  • Home inspection

Step 4: Reviewing Escrow Documents

If everything is still going smoothly, the next step is to review all relevant escrow documents you are provided with. Both buyer and seller need to take the time to closely review the important documents associated with finalizing the home sale.

Here are some of the documents you can expect to check over:

  • Mortgage application
  • Signed mortgage deed
  • Transfer deed
  • Bill of sale
  • Seller’s affidavit
  • Closing disclosure

Step 5: Conduct a Final Walkthrough 

The final walkthrough is the buyer’s chance to take one final look at the property!

While this step is not obligatory, it is highly advisable. Take a walkthrough of the house to examine whether it is in the same condition as you agreed upon.

Check whether nothing was damaged since your last inspection and if the seller is honoring the terms. At this point, you likely cannot back out of the deal unless you find major damage, but you can possibly get the seller to fix the issues. Typically, the final walkthrough occurs in the 24 hour period prior to closing.

Step 6: Signing the Closing Documents

After the final walkthrough, you are nearing the close of escrow. The buyer, the seller, the real estate agents, the title company and the escrow representative need to meet and sign the required documents to make the sale official. At this point, you also need to make the down payment and pay the closing costs.


What Type Of Issues Can Occur During Close Of Escrow?

Escrow gives buyers and sellers a chance to resolve any last-minute problems. That way, everyone leaves the transaction satisfied. Still, issues happen. These are the most common:

  • Delays: Things like missing paperwork or an issue with the property cause delays. This can lead to a closing date extension at the request of either party.


  • Title Issues: Sometimes, a title search reveals a problem. For example, a lien on the property can pause the transaction.


  • Contingencies: Essentially, contingencies are conditions for the transaction. If not resolved, they can halt the closing process. For instance, a house sale contingency gives the buyers a time limit to finalize the sale on their current property. It is possible to waive contingencies or renegotiate terms if an issue arises.



What Happens at Citrus Heritage Escrow?

During the escrow period, our title department begins researching and examining all historical records pertaining to the subject property. Barring any unusual circumstances, a commitment for title insurance is issued, indicating a clear title or listing any items which must be cleared prior to closing. The commitment is sent to you for review.

Your escrow officer follows instructions on your contract, coordinates deadlines, and gathers all necessary paperwork. For example, written requests for payoff information (called “demands”) are sent to the Seller’s mortgage company and any other lien holders.

When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you’ve gained the maximum benefit from your home sale or purchase.

Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200