The purchase or sale of a home can be exciting, stressful, and a whirlwind at times. If you are in the state of California, you will work with multiple parties during the course of the transaction and be introduced to new paperwork and processes that must be followed in a timely manner. With all this in mind, escrow can seem fairly complex.
At Elite Escrow, we believe that the more familiar you are with the escrow process and what to expect, the smoother your transaction will be. All parties in the escrow transaction have a similar goal in mind, to successfully “close” escrow in the most accurate and efficient way possible.
While there are many types of escrows, this article focuses on the process for a Residential Sale/Resale transaction between a buyer and seller in the state of California. Elite Escrow is based in San Diego, CA and we are a licensed and independent escrow company. This is how we close escrow!
STEP 1. Opening Escrow and Reviewing Information:
Escrow gets a request to open escrow typically via an email, phone call, or from a form filled out on our website. Usually the Seller’s Real Estate Agent (the Listing Agent) is the one who sets this in motion.
The request to open escrow also incudes a fully signed purchase agreement detailing the purchase price and agreed upon contingencies for the transaction. Then, the escrow team’s first step is to is to review the information on the purchase agreement so they can start following the instructions per the contract.
STEP 2. Gathering Information and Ordering Reports:
Next, escrow will gather information from the buyers and sellers. Escrow also will work with Title to order reports and documents such as the Preliminary Title Report. This is also the step where escrow will order Homeowners Association (HOA) docs, if the property has an HOA.
Escrow will also make sure the earnest money deposit is delivered safely and securely into escrow per the terms of the contract, which is typically within the first 3 days of opening escrow.
STEP 3. Escrow Instructions are Created:
Once escrow has the necessary information from the parties of the transaction, they can draw up their escrow instructions which will be sent out for signatures. During this time, escrow works with lenders on payoff demands, reviewing HOA documents if applicable, reviewing the Preliminary Title Reports, and other reports that are part of the contract.
STEP 4. Pre-Audit of the File:
Around this time, escrow usually receives the payoff demands and signed escrow instructions back from the buyer and seller. This is the step where escrow does a pre-audit of the file and checks with loan brokers, lenders, title, and the real estate agents, making sure all items are completed in order to close.
STEP 5. Signing:
Escrow calls the buyer to schedule a signing appointment and prepares the docs needed to close. This is typically around the last week before the close of escrow. Once loan docs have been signed, the lender works on funding the loan and escrow will instruct title to send the loan to the country recorders’ office for closing.
Congrats! You made it to closing!
And finally, you’ve made it to closing! This means all conditions of the contract have been met, the documents have been recorded by the county recorder’s office, and the transaction is confirmed and closed!
At this point, your Escrow Officer will then provide you with a final closing statement in a closing package which includes a breakdown of: The purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services, and a breakdown of the funds due to you at the close of escrow.
As you can see, there are a lot of steps when it comes to escrow. Escrow handles the funds, documents, paying all bills as authorized, works with multiple partied during the transaction, and responds to requests from the principals (aka the buyers and sellers). Your Escrow Officer’s job is super important because accuracy and communication is key, plus they act as a neutral third party to the transaction which protects all parties involved. Yay for escrow!
