Escrow: Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your Realtor’s advice) so that escrow and settlement go as smoothly as possible.
You will be asked for a down payment on the home you are purchasing. You can choose to put down as much or as little as you want (depending on your mortgage), but remember: the more you put down toward the price of your home, the less time it will take to pay off and the lower your monthly mortgage payments will be.
During this period, you will work with an escrow or settlement company, an independent third party that manages the funds and paperwork throughout the transaction. They will hold your deposit in a trust account and coordinate the activities required before closing. Make sure you always have sufficient funds available to cover your deposit check.
Your deposit check will be cashed and applied to the purchase price of the home once the sale closes. If the sale does not go through, you may be entitled to receive your deposit back, minus any cancellation fees, depending on your contract. In some cases, the seller may retain this money as liquidated damages. Always consult with your agent or attorney before signing.
- The escrow period is typically 30 days (but may be longer or shorter).
During this time, every item in the contract must be completed satisfactorily. Once escrow opens, both parties have agreed to a closing date and the required contingencies.
The most common contingency is the home inspection. It should be completed as soon as possible after signing the contract. If the inspection reveals issues, you may choose to renegotiate or cancel the agreement.
- Financing Contingency
After signing the purchase contract, you must secure your home loan. If you are unable to secure financing within the timeframe stated in the contract (and the seller does not grant an extension), you will need to decide whether to remove the financing contingency or cancel the purchase.
- Clear & Marketable Title
Your lender and title officer will ensure the property has a clear title, meaning there are no legal issues with ownership transfer. Local and state regulations will also be reviewed to confirm compliance.
- Secure Homeowner’s Insurance
Most lenders require homeowner’s insurance before closing. In areas affected by natural risks (fire, earthquake, floods), this process can take longer, so begin applying as early as possible.
- Contact Utility Companies
Schedule service activation (electricity, gas, water, internet, etc.) for the day you take possession of the home. This ensures everything is ready when you move in.
- Schedule the Final Walk-Through Inspection
The final walk-through typically occurs within 24–48 hours before closing.
Use this time to confirm:
- Repairs agreed upon have been completed
- No new damage has occurred
- Agreed-upon fixtures are still present
- The home is in the same condition as when the offer was accepted
If something is missing (e.g., a chandelier replaced with a cheaper fixture), notify your agent immediately.
You’re Done!
Once the sale closes and escrow is completed, you are officially the owner of your new home. Congratulations!